Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Shareholders' Equity [Abstract]

SHAREHOLDERS' EQUITY

16. SHAREHOLDERS’ EQUITY

Dividends

United Community’s source of funds for dividends to its shareholders is earnings on its investments and dividends from Home Savings. During the year ended December 31, 2011, United Community paid no cash or stock dividends. While Home Savings’ primary regulator is the FDIC, the FRB has regulations that impose certain restrictions on payments of dividends to United Community.

Home Savings must file an application with, and obtain approval from, the FRB if (i) the proposed distribution would cause total distributions for the calendar year to exceed net income for that year to date plus retained net income (as defined) for the preceding two years; (ii) Home Savings would not be at least adequately capitalized following the capital distribution; or (iii) the proposed distribution would violate a prohibition contained in any applicable statute, regulation or agreement between Home Savings and the FRB or the FDIC, or any condition imposed on Home Savings in an FRB-approved application or notice. If Home Savings is not required to file an application, it must file a notice of the proposed capital distribution with the FRB. As of December 31, 2011, Home Savings had no retained earnings that could be distributed. Home Savings paid no dividends to United Community during 2011. Under the Bank Order, Home Savings is not permitted to pay cash dividends to United Community without obtaining prior regulatory approval, and under the Holding Company Order, United Community is not permitted to pay cash dividends to its shareholders without obtaining prior regulatory approval.

Other Comprehensive Income

Other comprehensive income included in the Consolidated Statements of Shareholders’ Equity consists of unrealized gains and losses on available for sale securities and changes in unrealized gains and losses on postretirement liability. The change includes reclassification of gains or (losses) and impairment charges on sales of securities of $8.5 million, $8.7 million and $1.1 million for the years ended December 31, 2011, 2010 and 2009.

Other comprehensive income (loss) components and related tax effects are as follows:

		September 30,			September 30,			September 30,
	As of December 31,
	2011			2010			2009
	(Dollars in thousands)
Unrealized holding (loss) gain on securities available for sale	$	17,664		$	(813	)	$	1,990
Changes in net gains (losses) on postretirement benefit plans		690			670			(174	)
Reclassification adjustment for (gains) losses realized in income		(8,544	)		(8,745	)		(1,085	)
Net unrealized gains (losses)		9,810			(8,888	)		731
Tax effect (35%)		—			—			256
Net of tax amount	$	9,810		$	(8,888	)	$	475

The following is a summary of accumulated other comprehensive income (loss) balances, net of tax:

		September 30,			September 30,		September 30,
	Balance at December 31, 2010			Current Period Change		Balance at December 31, 2011
	(Dollars in thousands)
Unrealized gains (losses) on securities available for sale	$	(5,673	)	$	9,120	$	3,447
Unrealized gains (losses) on postretirement benefits		895			690		1,585
Total	$	(4,778	)	$	9,810	$	5,032

Liquidation Account

At the time of the Conversion, Home Savings established a liquidation account, totaling $141.4 million, which was equal to its regulatory capital as of the latest practicable date prior to the Conversion. In the event of a complete liquidation, each eligible depositor will be entitled to receive a distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for the accounts then held.