REGULATORY CAPITAL REQUIREMENTS

3 Months Ended

Mar. 31, 2016

Banking And Thrift [Abstract]

REGULATORY CAPITAL REQUIREMENTS

12. REGULATORY CAPITAL REQUIREMENTS

Home Savings and United Community are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Home Savings and United Community. The regulations require Home Savings to meet specific capital adequacy guidelines in keeping with the regulatory framework for prompt corrective action that involve quantitative measures of Home Savings’ assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. Home Savings’ capital classification is also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors.

The Basel III Capital Rules establish a common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), a minimum Tier 1 capital to risk-based assets requirement (6% of risk-weighted assets) and assigns a risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The rules also require unrealized gains and losses on certain available-for-sale securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. In connection with the adoption of the Basel III Capital Rules, United Community and Home Savings elected to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1.  The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital risk-based weighted assets in addition to the amount necessary to meeting its minimum risk-based capital requirements.

The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective. The capital conservation buffer for 2016 is 0.625%.  The final rule also implemented consolidated capital requirements.

Quantitative measures established by regulation for capital adequacy require Home Savings to maintain minimum ratios of Tier 1 (or Core) capital (as defined in the regulations) to average total assets (as defined) and of total risk-based capital (as defined) to risk-weighted assets (as defined).  United Community and Home Savings’ Common Equity Tier 1 capital consists of common stock and related paid-in capital, net of treasury stock, and retained earnings. Common Equity Tier 1 for both United Community and Home Savings is reduced by intangible assets, net of associated deferred tax liabilities and subject to transition provisions. Actual and regulatory required capital ratios for Home Savings, along with the dollar amount of capital implied by such ratios, are presented below.

	March 31, 2016
											To Be Well Capitalized
						Minimum Capital					Under Prompt
						Requirements For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Total capital (to risk-weighted assets)	$	245,669		18.39	%	$	115,224		8.625	%	$	133,594		10.00	%
Tier 1 capital (to risk-weighted assets)		228,894		17.13	%		88,506		6.625	%		106,875		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		228,894		17.13	%		68,467		5.125	%		86,836		6.50	%
Tier 1 capital (to average assets)**		228,894		11.53	%		79,427		4.000	%		99,284		5.00	%

	December 31, 2015
											To Be Well Capitalized
						Minimum Capital					Under Prompt
						Requirements					Corrective Action
	Actual					Per Regulation					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Total capital (to risk-weighted assets)	$	240,697		18.72	%	$	102,879		8.00	%	$	128,599		10.00	%
Tier 1 capital (to risk-weighted assets)		224,486		17.46	%		77,159		6.00	%		102,879		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		224,486		17.46	%		57,869		4.50	%		83,589		6.50	%
Tier 1 capital (to average assets)**		224,486		11.46	%		78,347		4.00	%		97,934		5.00	%

** Tier 1 Leverage Capital Ratio

Management believes that as of March 31, 2016 and December 31, 2015, Home Savings meets all capital adequacy requirements to which they were subject.  As of March 31, 2016 and December 31, 2015, Home Savings was considered well capitalized.

The components of Home Savings’ regulatory capital are as follows:

	March 31, 2016			December 31, 2015
Total shareholders' equity	$	230,771		$	220,872
Add (deduct)
Accumulated other comprehensive income		12,954			19,236
Intangible assets		(10	)		(12	)
Disallowed deferred tax assets		(14,821	)		(15,610	)
Disallowed capitalized mortgage loan servicing rights		—			—
Tier 1 Capital		228,894			224,486
Allowance for loan losses and allowance for unfunded lending commitments    limited to 1.25% of total risk-weighted assets		16,775			16,211
Total risk-based capital	$	245,669		$	240,697

Actual and regulatory required consolidated capital ratios for United Community, along with the dollar amount of capital implied by such ratios, are presented below.

	March 31, 2016
											To Be Well Capitalized
						Minimum Capital					Under Prompt
						Requirements For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Total capital (to risk-weighted assets)	$	264,236		19.81	%	$	115,024		8.625	%	$	133,361		10.00	%
Tier 1 capital (to risk-weighted assets)		247,478		18.56	%		88,351		6.625	%		106,689		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		247,478		18.56	%		68,347		5.125	%		86,684		6.50	%
Tier 1 capital (to average assets)**		247,478		12.46	%		79,425		4.000	%		99,281		5.00	%
	December 31, 2015
											To Be Well Capitalized
						Minimum Capital					Under Prompt
						Requirements For Capital					Corrective Action
	Actual					Adequacy Purposes					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Total capital (to risk-weighted assets)	$	261,732		20.35	%	$	102,886		8.00	%	$	128,608		10.00	%
Tier 1 capital (to risk-weighted assets)		245,503		19.09	%		77,165		6.00	%		102,886		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		245,503		19.09	%		57,874		4.50	%		83,595		6.50	%
Tier 1 capital (to average assets)**		245,503		12.53	%		78,348		4.00	%		97,934		5.00	%

The components of United Community’s consolidated regulatory capital are as follows:

	March 31, 2016			December 31, 2015
Total shareholders' equity	$	251,804		$	244,245
Add (deduct)
Accumulated other comprehensive income		12,938			19,220
Intangible assets		(10	)		(12	)
Disallowed deferred tax assets		(17,254	)		(17,950	)
Disallowed capitalized mortgage loan servicing rights		—			—
Tier 1 Capital		247,478			245,503
Allowance for loan losses and allowance for unfunded lending commitments    limited to 1.25% of total risk-weighted assets		16,758			16,229
Total risk-based capital	$	264,236		$	261,732