Modest loan growth, lower expenses and a sharp decrease in problem loans powered United Community Banks in Blairsville, Ga., to a $16.4 million profit in the second quarter.

Earnings were up 9.3% from the prior quarter, but were down from the second quarter of last year, when results were boosted by a substantial one-time tax gain. Its earnings per share of 27 cents met the expectations of analysts polled by Bloomberg.

"We had a solid start in 2014 and continued to build momentum through the second quarter," Jimmy Tallent, the president and chief executive of the $7.4 billion-asset company, said in a news release Thursday. "Stabilizing our net interest margin and growing loans, deposits and fee revenue will drive earnings growth."

Total loans increased 5.2% year over year, to $4.4 billion, as gains in commercial loans and home equity lines of credit offset declines in construction lending. The net interest margin fell 12 basis points, however, as persistently low interest rates pressured loan yields.

Earnings were also aided by substantially improved credit quality and lower expenses. With net chargeoffs down to just $4.2 million, from more than $72 million a year earlier, the company was able to reduce its provision for loan losses by 95%, to $2.2 million. Its noninterest expense, excluding foreclosed property costs, fell nearly 8% year over year, to $40.8 million, due primarily to lower salary and deposit insurance costs.

Fee revenue was up 16% from the prior quarter, to $14.1 million, due primarily to gains in fees from service charges and debit card transactions. But fee revenue was down 11% year over year as a slowdown in refinancing activity sharply reduced its income from mortgage banking.

United Community's shares were up 2.7% in early trading Thursday, to $16.

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