The Blairsville-based bank reported its ninth straight quarterly loss last week, and said it is considering options to strengthen its balance sheet. How much United will seek isn’t clear, but red ink has continued despite some improvements in loan problems and growth in deposits.
United, No. 8 in market share in metro Atlanta, remains well-capitalized by regulatory standards. The publicly owned bank has struggled with a real estate-heavy loan portfolio and speculation it could be an acquisition target, however.
Jeff Davis, a bank analyst with Guggenheim Securities in Nashville, said United might need to raise up to $300 million to $400 million to boost capital levels and have enough money to pay off government aid and have cash reserves.
United received $180 million in Troubled Asset Relief Program assistance during the depths of the financial crisis. Though it has paid quarterly dividends to the government, the vast majority of the debt remains.
Bank officials declined comment.
United President and CEO Jimmy Tallent said last week officials have been weighing options and have been “encouraged by the progress that we’ve made, and the interest that we have received.” Tallent said the bank expects an announcement before the end of March.
United, which has branches in Georgia, North Carolina and Tennessee, reported a loss of $345 million for all of 2010, including a $210.6 million non-cash charge. Nonperforming assets improved to $321 million, the lowest point in two years.
Davis said shareholders have been preparing for United to announce another stock sale to boost its capital levels to satisfy regulators and eventually pay off TARP. But such sales increase the number of shares, reducing how much individual investors own in the company.
“Dilution is the cost of staying in the game,” Davis said.
Chris Marinac, bank analyst with FIG Partners in Atlanta, said executives have long weighed the impact of diluting shareholders vs. the need to raise additional funds.
United should raise at least $200 million, he said, but doubling that to $400 million could make a splash with investors and signal United is once again playing offense.
“If you’re going to take the dilution why not go on the offense,” Marinac said.
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