United Community Banks Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Georgia banking group United Community Banks (Nasdaq: UCBI  ) slid more than 13% in intraday trading as investors reacted to the bank's third-quarter earnings report.

So what: Not surprisingly, investors have been particularly jumpy about bank earnings, and earlier in the week we saw fellow Southern banks BancorpSouth (NYSE: BXS  ) and Regions Financial (NYSE: RF  ) take it on the chin when they missed earnings expectations. The tale was pretty similar for United Community. Analysts were expecting the bank to lose $0.25 per share during the quarter and, excluding a big goodwill impairment charge, it ended up reporting a per-share loss of $0.30.

Now what: I wouldn't completely dismiss the importance of banks' earnings. However, it's important that investors look beyond the headline numbers to figure out what else may be going on. In United Community's case, while the earnings number was worse than expected, the banks' loan portfolio made significant strides. Nonperforming assets declined slightly from last quarter and 16% from last year, and net charge-offs dropped 18% quarter over quarter and 45% year over year. With total nonperforming assets still at nearly 5% of total assets, the bank still has plenty of work ahead, but the stock's current 0.4 price-to-tangible-book ratio suggests that investors have already left this bank for dead.

Interested in more info on United Community Banks? Add it to your watchlist by clicking here.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.


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