SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2014

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, 2014, United Community paid total cash dividends of $0.02 per common share. 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, 2014.

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, 2014, Home Savings had no retained earnings that could be distributed based on cumulative losses over the aforementioned period. Home Savings paid no dividends to United Community during 2014.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) included in the consolidated statements of shareholders’ equity consists of unrealized gains and losses on available for sale securities, disproportional tax effects and changes in unrealized gains and losses on the postretirement liability. The change includes reclassification of net gains or (losses) and impairment charges on sales of securities of $444,000, $2.6 million and $6.3 million for the years ended December 31, 2014, 2013 and 2012.

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

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan			Total
2014	(Dollars in thousands)
Balances at beginning of period	$	(40,393	)	$	(2,972	)	$	1,829		$	(129	)	$	(41,665	)
Income tax		14,138			(14,138	)		(640	)		640			-
Balances at beginning of period, net of tax		(26,255	)		(17,110	)		1,189			511			(41,665	)
Other comprehensive income (loss) before reclassifications		22,229			-			(130	)		-			22,099
Reclassification adjustment for (gains) losses realized in income		(289	)		-			(143	)		-			(432	)
Net current period other comprehensive income		21,940			-			(273	)		-			21,667
Balances at end of period, net of tax	$	(4,315	)	$	(17,110	)	$	916		$	511		$	(19,998	)
	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan			Total
2013	(Dollars in thousands)
Balances at beginning of period	$	8,053		$	(2,972	)	$	1,730		$	(129	)	$	6,682
Other comprehensive income (loss) before reclassifications		(45,869	)					288			-			(45,581	)
Reclassification adjustment for (gains) losses realized in income		(2,577	)					(189	)		-			(2,766	)
Net current period other comprehensive income		(48,446	)		-			99			-			(48,347	)
Balances at end of period	$	(40,393	)	$	(2,972	)	$	1,829		$	(129	)	$	(41,665	)
	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan			Total
2012	(Dollars in thousands)
Balances at beginning of period	$	5,538		$	(2,092	)	$	1,707		$	(121	)	$	5,032
Disproportionate tax effects		-			(880	)		-			(8	)		(888	)
Other comprehensive income (loss) before reclassifications		8,827			-			193			-			9,020
Reclassification adjustment for (gains) losses realized in income		(6,325	)		-			(170	)		-			(6,495	)
Reclassification adjustment for OTTI charges		13			-			-			-			13
Net current period other comprehensive income		2,515			-			23			-			2,538
Balances at end of period	$	8,053		$	(2,972	)	$	1,730		$	(129	)	$	6,682

As of June 30, 2014, management concluded it was more likely than not that the Company’s net deferred tax asset (DTA) would be realized and accordingly determined a full deferred tax valuation allowance was no longer required. Upon reversal of the former full deferred tax valuation allowance as of June 30, 2014, certain disproportionate tax effects are retained in accumulated other comprehensive income (loss) totaling approximately a ($16.6) million loss. Almost the entire disproportionate tax effect is attributable to valuation allowance expense recorded through other comprehensive income (loss) on the tax benefit of losses sustained on the available for sale securities portfolio while the Company was in a full deferred tax valuation allowance. This valuation allowance was appropriately reversed through continuing operations at June 30, 2014, leaving the original expense in accumulated other comprehensive income (loss), where it will remain in accordance with the Company’s election of the “portfolio approach”, until such time as the Company would cease to have an available for sale security portfolio.

The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the year ended December 31, 2014:

Details About Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income			Affected Line Item on the Statement Where Net Income is Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	(444	)	Net gains on securities available for sale
		155		Tax expense (benefit)
		(289	)	Net of tax
Amortization of postretirement benefits prior service costs		(220	)	Salaries & employee benefits
		77		Tax expense (benefit)
		(143	)	Net of tax
Total reclassification during the period	$	(432	)

The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the year ended December 31, 2013:

Details About Accumulated Other Comprehensive Income Components	Amount Reclassified From Accumulated Other Comprehensive Income			Affected Line Item on the Statement Where Net Income is Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	(2,577	)	Net gains on securities available for sale
		-		Tax expense (benefit)
		(2,577	)	Net of tax
Amortization of postretirement benefits prior service costs		(189	)	Salaries & employee benefits
		-		Tax expense (benefit)
		(189	)	Net of tax
Total reclassification during the period	$	(2,766	)

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.