United Community Bank announced earlier this wekk, that it has increased its allowance for loan losses for the third quarter and will post almost a $40 million loss “due to continued credit deterioration in the residential construction portfolio.”

UCB said it increased its allowance for loan losses to 1.91 percent of total loans. The third quarter provision of $76 million exceeded net charge-offs of $56 million, resulting in a $20 million build-up of the allowance in anticipation of further credit challenges. Additionally, the company wrote down other real estate assets by $8 million to expedite asset sales in the fourth quarter.

As a result of these actions, United expects to report a net loss of $39.9 million, or 84 cents per common share, for the third quarter of 2008.

Of the net third-quarter charge-offs of $56 million, 83 percent were residential construction loans in metro Atlanta. At quarter-end, the allowance-to-loans ratio was 1.91 percent, compared with 1.53 percent on June 30.

(Rome News Tribune)