United Community Banks (UCBI) in Blairsville, Ga., reported a huge profit after a tax reversal allowed it to purge its balance sheet of bad loans.
The $7.2 billion-asset company earned $230 million in the second quarter, compared to $6.5 million a year earlier. The company was allowed to recapture a $256 million deferred tax valuation allowance, which allowed it to sell $151 million in classified assets.
"We believed the time was right to take the final step toward putting the financial crisis behind us by selling our stress-related classified assets, including a bulk sale of $131 million," Jimmy Tallent, United Community's president and chief executive, said in a press release.
The loan-loss provision was $48.5 million, compared to $18 million a year earlier. Net chargeoffs more than tripled those from the second quarter of 2012, at $72.4 million. The sale of classified loans, and the corresponding chargeoffs, helped United Community cut its nonperforming assets by 78% from a year earlier, to $31.8 million.
United Community's net interest fell 4% from a year earlier, to $54.6 million. The net interest margin narrowed by 12 basis points from a year earlier, to 3.31%. Noninterest income rose 27% from a year earlier, to $16.3 million, because of higher fees from mortgages and advisory services.
Noninterst expenses rose 10% from a year earlier, to $48.8 million, largely because of higher severance costs.