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Bank explains restatements
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Forsyth County News

A local bank president says recently reported additional income tax expenses shouldn’t have any bearing on day-to-day business.

Tim Heard, president of United Community Bank’s three Forsyth branches, said a determination by the bank’s corporate leaders to restate its financial results for the 2010 fiscal year and first three quarters of 2011 won’t change business.

"We’re very well capitalized and we have a lot of liquidity," he said. "We’ve won the JD Powers award for outstanding customer service for the past two years in a row, so this won’t affect our banking operations in the least."

According to reports from United Community Bank’s corporate offices in Blairsville, the bank earlier this month "determined an additional income tax expense of $156.7 million."

As a result, the report goes on to state, "the revision for the fourth quarter of 2010 will increase the previously reported loss of $16.4 million to $173.1 million … and will increase the previously reported net loss for the full year 2010 of $345.6 million to $502.3 million."

The determination caused United Community’s tangible book value of stock shares to fall in value from $11.26 per share to $6.61 per share, according to bank reports.

The stock price has remained fairly constant, at around $7, throughout January.

As a result of the drop in stock value, the law firm of Levi Korinsky in New York is investigating a potential suit against it on behalf of stockholders, according to its Web site.

The Shareholders Foundation also launched a probe into the matter.

Craig Metz, executive vice president of marketing for United Community, said a portion of the difference in the net losses stems from the bank’s problem asset disposition plan.

"We set out in the first quarter [of 2011] to purposefully get some properties and foreclosures off our books," he said.

The other part of the difference comes from tax practices. Under IRS rules, Metz said, businesses can carry forward loses against future gains.

In a statement, United Community Bank President and CEO Jimmy Tallent called the accounting treatment for deferred tax assets "complex and requires a great deal of judgment."

"While we continue to believe it is likely that we will realize all of our net deferred tax assets many years prior to their expiration, the [U.S. Securities and Exchange Commission] questioned the weighting of negative and positive factors affecting our ability to accurately project our long-term taxable earnings," he said. "By taking these actions, we have now resolved the SEC’s concern."

Metz described the system as being similar to the bank having "a savings account," although not involving literal money, with SEC control.

"It’s like we’ve got a saving account, but the SEC says we can’t use it until we reach a certain level of profitability, but they never tell us how much or how long," he said.

"They want exactly the same thing we want, for us to be making enough money."

He said the process involves the ways funds are kept on paper.

"We’re carrying forward our loses from 2010 and 2011 against our future gains," he said. "The only thing that changed is how we accounted for it and how the SEC wants us to put it in our books."

Like Heard, Metz said the issue won’t have any bearing on the average United Community customer.

"This doesn’t have any impact on them," he said. "All of our funds are insured by the FDIC."

On Thursday, the bank announced its income earnings for fourth quarter 2011.

A release stated a net income of $9.9 million, or 12 cents per share, for that time period.

The report also showed a 2011 net loss of $227 million, but core transaction deposits up by $266 million.

"United is moving forward with a sound balance sheet and strong capital structure," said Tallent in a statement. "This is beginning to be demonstrated in our financial results including the fourth quarter profit.

"We believe the remaining credit challenges are manageable and while we are not invulnerable to the still-fragile economy, our expectation is continued profitability during 2012."

United Community Bank has 106 offices throughout Georgia, North Carolina and Tennessee.

Among them are three in Forsyth: 1015 Buford Hwy.; 4365 Browns Bridge Road; and 5125 Atlanta Hwy.

In July, the Forsyth County commission voted to award the county’s banking services to United Community.

The vote was 2-1 with Commissioners Brian Tam and Pete Amos in favor of move and Jim Boff opposed.

Commissioner Patrick Bell recused himself from the vote and Todd Levent was absent from that meeting.