Shareholders' Equity

12 Months Ended

Dec. 31, 2012

Shareholders' Equity [Abstract]

SHAREHOLDERS' EQUITY

15. 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, 2012, 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 as of December 31, 2012.

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, 2012, Home Savings had no retained earnings that could be distributed. Home Savings paid no dividends to United Community during 2012. Under the Bank Order, Home Savings was not permitted to pay cash dividends to United Community without obtaining prior regulatory approval, and this prohibition continues under the MOU. 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 the postretirement liability. The change includes reclassification of gains or (losses) and impairment charges on sales of securities of $6.3 million, $8.5 million and $8.7 million for the years ended December 31, 2012, 2011 and 2010.

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

	As of December 31,
	2012			2011			2010
	(Dollars in thousands)
Unrealized holding gain (loss) on securities available for sale	$	8,827		$	19,044		$	527
Reclassification adjustment for gains realized in income		(6,325	)		(8,633	)		(8,803	)
Reclassification adjustment for prior OTTI charges		13			89			58
Net unrealized gains (losses)		2,515			10,500			(8,218	)
Tax effect (35%)		(880	)		—			—
Net-of-tax amount		1,635			10,500			(8,218	)
Net loss (gain) on employee pension plan		(170	)		(79	)		(671	)
Prior service cost (credit)		193			(689	)		—
Amortization of prior service cost		—			78			1
		23			(690	)		(670	)
Tax effect		(8	)		—			—
Net of tax amount		15			(690	)		(670
	$	1,650		$	9,810		$	(8,888	)

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

	Balance at December 31, 2011		Current Period Change		Balance at December 31, 2012
	(Dollars in thousands)
Unrealized gains on securities available for sale	$	3,447	$	1,635	$	5,082
Unrealized gains on postretirement benefits		1,585		15		1,600
Total	$	5,032	$	1,650	$	6,682

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.