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Regulatory Enforcement Action
12 Months Ended
Dec. 31, 2011
Regulatory Enforcement Action [Abstract]  
REGULATORY ENFORCEMENT ACTION

3. REGULATORY ENFORCEMENT ACTION

Before July 21, 2011, the Office of Thrift Supervision (OTS) was the federal regulator of savings associations and their holding companies. The Dodd-Frank Act required the transfer of OTS functions to the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Bank (FRB), as of July 21, 2011. More specifically, as of July 21, 2011, United Community ceased to be regulated by the OTS and is now regulated by the FRB.

On August 8, 2008, the board of directors of United Community approved a Stipulation and Consent to the Issuance of an Order with the OTS, predecessor to United Community’s current primary federal regulator, the FRB. Simultaneously, the board of directors of Home Savings approved a Stipulation and Consent to the Issuance the Bank Order with the FDIC, the Ohio Division of Financial Institutions, Home Savings, State regulator. Although United Community and Home Savings have agreed to the issuance of the Holding Company Order and the Bank Order, respectively, neither has admitted or denied any allegations of unsafe or unsound banking practices, or any legal or regulatory violations. No monetary penalties were assessed by the OTS, the FDIC or the Ohio Division.

The Holding Company Order requires United Community to obtain FRB approval prior to: (i) incurring or increasing its debt position; (ii) repurchasing any United Community stock; or (iii) paying any dividends. The Holding Company Order also required United Community to develop a debt reduction plan and submit the plan to the OTS for approval.

The Bank Order requires Home Savings, within specified timeframes, to take or refrain from certain actions, including: (i) retaining a bank consultant to assess Home Savings’ management needs and submitting a management plan that identifies officer positions needed, identifies and establishes board and internal operating committees, evaluates Home Savings’ senior officers, and provides for the hiring of any additional personnel; (ii) seeking regulatory approval prior to adding any individuals to the board of directors or employing any individual as a senior executive officer of Home Savings; (iii) not extending additional credit to classified borrowers; (iv) establishing a compliant Allowance for Loan and Lease Loss methodology; (v) enhancing its risk management policies and procedures; (vi) adopting and implementing plans to reduce its classified assets and delinquent loans, and to reduce loan concentrations in nonowner-occupied commercial real estate and construction, land development, and land loans; (vii) establishing board of directors committees to evaluate and approve certain loans and oversee Home Savings’ compliance with the Bank Order; (viii) revising its loan policy and enhancing its underwriting and credit administration functions; (ix) developing a strategic plan and budget and profit plan; (x) correcting all violations of laws, rules, and regulations and implementing procedures to ensure future compliance; (xi) increasing its Tier 1 leverage ratio to 8.0% and its total risk-based capital ratio to 12.0% by December 31, 2008; and (xii) seeking regulatory approval prior to declaring or paying any cash dividend. See Note 17 for details on current capital levels of Home Savings.

The regulators, at their discretion, have the ability to place additional requirements on both the Bank and the Holding Company. Both the Holding Company Order and the Bank Order remain in effect. Since the issuance of the Bank Order, there has been no change in the requirements of that Order. The Holding Company Order, however, was amended November 5, 2010. This amendment removed a requirement in the original Holding Company Order to provide the OTS with a debt reduction plan and added a requirement to provide the OTS with a capital plan. The capital plan is consistent with and incorporated into the strategic planning process that Home Savings has already been undertaking under the terms of the Bank Order. The capital plan was submitted to the OTS in December 2011. In keeping with the capital plan, the Company may seek to raise additional capital, and, following any such capital raise, may potentially reduce the level of adversely classified assets through the sale of such assets. The type, timing, amount and terms of possible securities that would be issued in such an offering have yet to be finalized.