United Community Banks Inc. in Blairsville, Ga., announced Thursday that it expects to miss its profit target for this quarter as a result of continued deterioration in the housing and construction and markets and its lingering exposure to two North Carolina real estate projects that turned out to be fraudulent.
The $8.2 billion-asset United said it expects to record chargeoffs of about $13 million, versus $5.2 million for the third quarter.
It also said it would report a sevenfold increase in its loan-loss provision from the third quarter, to about $29.5 million.
United said it expects to report earnings of 12 to 14 cents a share for this quarter, down from earlier estimates of 20 to 24 cents.
In the third quarter it earned $22.5 million, or 46 cents a share.
United's shares plunged on news of the profit warning. By late Thursday the shares had dropped 12.3% from Wednesday's closing price, to $15.55.
The increased provision includes a special $3 million provision relating to a development in Spruce Pines, N.C. According to the North Carolina Attorney General's Office, United was one of about a dozen banking companies caught up in a real estate scheme in which the developer, Peerless Development Group, obtained loans to buy and build on land in Spruce Pines and then used the proceeds to fund expensive vacations for the company's executives.
Funds were also diverted to other Peerless Development projects, officials said.
United made loans on a nearby development called Winery Heights, which also was linked to Peerless Development.
