United Community Banks (UCBI) Reports an Additional Income Tax Expense of $157 Million
United Community Banks, Inc. (NASDAQ: UCBI) today reported that it has determined an additional income tax expense of $156.7 million and a charge to other comprehensive income in shareholders' equity of $10.2 million will be recorded to establish a full deferred tax asset valuation allowance as of December 31, 2010. Recording this valuation allowance should resolve the previously disclosed comments made by the U.S. Securities and Exchange Commission ("SEC") regarding United's net deferred tax assets.
By increasing the valuation allowance for its deferred tax assets as of December 31, 2010, United will be restating its financial statements for the fourth quarter and year ended December 31, 2010 and the first three quarters of 2011, and will revise the disclosures contained in its SEC periodic reports for those periods.
Reflecting the additional income tax expense of $156.7 million, the revision for the fourth quarter of 2010 will increase the previously reported net loss of $16.4 million to $173.1 million, or $9.25 per share, and will increase the previously reported net loss for the full year 2010 of $345.6 million to $502.3 million, or $27.09 per share. The restated results for the first quarter of 2011 will be a net loss of $237.3 million, or $13.00 per share, rather than the previously reported net loss of $142.5 million, or $7.87 per share. The restated results for the second quarter of 2011 will be net income of $12.0 million, or 16 cents per diluted share, rather than the previously reported net income of $7.6 million, or 8 cents per diluted share. The restated results for the third quarter of 2011 will be a net loss of $11.3 million, or 25 cents per share, as compared to the previously reported net loss of $6.2 million, or 16 cents per share.
The restatements will reduce tangible book value and the tangible equity and tangible common equity to asset ratios for the respective periods. As of September 30, 2011, the restated tangible book value will be $6.66 per share rather than the previously reported $11.26 per share and the restated tangible equity and tangible common equity to asset ratios will be 8.47 percent and 5.70 percent as compared to the previously reported 11.76 percent and 9.09 percent, respectively.
The restatements will have no impact on United's balance sheet other than to adjust the amount of net deferred tax assets and shareholders' equity at each period. Furthermore, the restatements will not materially impact previously reported regulatory capital ratios.
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By increasing the valuation allowance for its deferred tax assets as of December 31, 2010, United will be restating its financial statements for the fourth quarter and year ended December 31, 2010 and the first three quarters of 2011, and will revise the disclosures contained in its SEC periodic reports for those periods.
Reflecting the additional income tax expense of $156.7 million, the revision for the fourth quarter of 2010 will increase the previously reported net loss of $16.4 million to $173.1 million, or $9.25 per share, and will increase the previously reported net loss for the full year 2010 of $345.6 million to $502.3 million, or $27.09 per share. The restated results for the first quarter of 2011 will be a net loss of $237.3 million, or $13.00 per share, rather than the previously reported net loss of $142.5 million, or $7.87 per share. The restated results for the second quarter of 2011 will be net income of $12.0 million, or 16 cents per diluted share, rather than the previously reported net income of $7.6 million, or 8 cents per diluted share. The restated results for the third quarter of 2011 will be a net loss of $11.3 million, or 25 cents per share, as compared to the previously reported net loss of $6.2 million, or 16 cents per share.
The restatements will reduce tangible book value and the tangible equity and tangible common equity to asset ratios for the respective periods. As of September 30, 2011, the restated tangible book value will be $6.66 per share rather than the previously reported $11.26 per share and the restated tangible equity and tangible common equity to asset ratios will be 8.47 percent and 5.70 percent as compared to the previously reported 11.76 percent and 9.09 percent, respectively.
The restatements will have no impact on United's balance sheet other than to adjust the amount of net deferred tax assets and shareholders' equity at each period. Furthermore, the restatements will not materially impact previously reported regulatory capital ratios.
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