The $6.9 billion-asset company said that it will record $156.7 million in an additional income tax expense and $10.2 million in a charge to other comprehensive income in shareholders' equity as of Dec. 31, 2010.
Banks receive deferred tax assets when they record losses and then use these assets to offset income tax expense in future quarters after returning to profitability. However, if a bank hasn't been profitable for a prolonged period then the bank has to take a valuation allowance against the asset in order to save it.
United Community also said that it will have to restate its financials for the fourth quarter and year ending Dec. 31, 2010 and the first three quarters of 2011. The restatements will reduce the company's tangible book value at Sept. 30 from $11.26 per share to $6.66 per share.
The company's 2010 fourth-quarter loss will jump from the previously stated $16.4 million to $173.1 million after the additional income tax expense. The loss for 2010 will grow from $345.6 million to $502.3 million.
United Community's 2011 first quarter loss will surge from the previously stated $142.5 million to $237.3 million while its second quarter income will grow to $12 million from $7.6 million. Its third-quarter loss will total $11.3 million, up from the previously stated $6.2 million.
The company's shares were trading at $6.43 Friday afternoon, a drop of more than 11% from Thursday's closing.
In a research note Friday, Sandler O'Neill & Partners LP downgraded United Community's shares to hold from buy. The firm stated that the announcement "doesn't derail the long-term recovery story, but it appears to push it further out and add a level of uncertainty."
Jimmy Tallent, United Community's president and chief executive, said that the bank will still be profitable in the fourth quarter.
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