This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

10 Community Bank Takeover Targets

4. United Community Banks

Company Profile

Shares of United Community Banks (UCBI - Get Report) of Blairsville, Ga. closed at $1.71 Monday, declining 62% over the previous year.

Matt Olney said the company "fits a different type of bidder. Private equity might be a better fit for UCBI."

This outlook was supported by United Community's announcement early this month that it would defer interest payments on $54.6 million in trust-preferred securities, in a move the bank said was taken in consultation with the Federal Reserve Bank of Atlanta, which would "improve the company's liquidity position," according to CEO Jimmy Tallent.

Chip MacDonald, a partner at Jones Day, also named United Community Banks as a target, as the company is "looking to recapitalize or sell I suspect," he said. This view is supported by 10 consecutive quarters of operating losses, a year-end tangible common equity ratio of 6.35% and $180 million in TARP money owed to the government.

The company's fourth-quarter results showed some signs of a turnaround in credit quality.

Income Statement

United Community reported a fourth-quarter net loss of $16.4 million, or 20 cents a share, following a net loss of $239 million, or $2.52 a share, in the third quarter, when the company recorded a noncash goodwill charge of $210.6 million In the fourth quarter of 2009, the net loss was $39.9 million, or 45 cents a share.

The fourth quarter results included a partial reversal of previously recorded fraud losses, of $.2 million. After $2.6 million in preferred dividends and discount accretion, the bottom-line net loss to common shareholders was $19 million.

The provision for loan losses declined to $47.8 million in the fourth quarter, from $$50.5 million in the third quarter and $90 million in the fourth quarter of 2009. The fourth-quarter provision kept pace with net charge-offs of $47.7 million.

Jimmy Tallent said that "credit quality improved from the third quarter in every measure, with nonperforming assets, net charge-offs and provision for loan losses falling to their lowest levels in many quarters." He added that with the housing market and economy within United Community's footprint remaining week, the company was looking "toward the future with guarded optimism."

The net interest margin was 3.58% in the fourth quarter, increasing from 3.40% a year earlier. Tallent said the margin would have been 30 basis points higher in the fourth quarter if the company hadn't maintained "liquidity significantly above historical levels in light of the uncertain times."

Balance Sheet

Total assets were $7.4 billion as of December 31, and the nonperforming assets ratio was 4.32%, declining from 4.96% the previous quarter and 4.81% a year earlier. The fourth-quarter net charge-off ratio was 4.03% and loan loss reserves covered 3.79% of total loans as of December 31.

Stock Ratios

The shares trade for 0.4 times the $4.76 tangible book value per share reported by the company as of December 31.

Analyst Ratings

All nine analysts covering the company have neutral ratings.

8 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BXS $24.46 0.91%
FCNCA $250.05 0.01%
FMBI $17.39 1.20%
MBFI $30.77 1.10%
SBCF $14.37 1.20%

Markets

DOW 18,149.54 +69.40 0.38%
S&P 500 2,121.66 +3.97 0.19%
NASDAQ 5,106.4180 +14.3330 0.28%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs