United Community Banks Inc. in Blairsville, Ga., said it will record a special loan-loss provision of $25 million for the third quarter due to concerns over collateral associated with its largest loan relationship.

The $7.4 billion-asset company said in a press release Wednesday that the borrower was current with principle and interest payments and related expenses for the underlying collateral. Still, after assessing the $76.6 million commercial loan relationship, the company said it had determined that the repayment of the loans through the sale of collateral was unlikely due to disposition activity below expected levels.

"Even though the collateral accounts would be sufficient to cover debt service requirements and related costs for another five to six quarters, we believe it is prudent to classify these loans as nonperforming at quarter-end due to the uncertainties about sources of repayment in the future," Jimmy Tallent, the company's president and chief executive, said in a press release. "We plan to obtain updated appraisals in the fourth quarter and believe that the $25 million specific reserve will be sufficient to cover any chargeoffs to fair market values."

United Community had an $11 million provision in the second quarter and a $50.5 million provision in the third quarter of 2010.

Tallent said in the release that the company still expects to report earnings of 10 cents a share. The company's third-quarter conference call is scheduled for Oct. 27.

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