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, 2017, United Community paid total cash dividends of $0.14 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, 2017.

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, 2017, Home Savings had no retained earnings that could be distributed based on cumulative dividends and net income over the aforementioned period. Home Savings paid a $15.0 million dividend to United Community from current period earnings during 2017.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) included in the consolidated statements of shareholders’ equity consists of unrealized gains and losses on available for sale securities, unrealized losses on securities transferred from available for sale to held to maturity, accretion of unrealized losses on securities transferred from available for sale to held to maturity, disproportional tax effects and changes in unrealized gains and losses on the postretirement plan. The change includes reclassification of net gains or (losses) on sales of securities of $566,000, $604,000 and $142,000 for the years ended December 31, 2017, 2016 and 2015.

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

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Unrealized Gains (Losses) on Held to Maturity			Total
2017	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(3,130	)	$	(17,110	)	$	(800	)	$	(21,040	)
Other comprehensive loss before reclassifications		2,946			—			—			2,946
Accretion of unrealized losses transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			129			129
Reclassification adjustment for gains realized in income		(368	)		—			—			(368	)
Net current period other comprehensive income		2,578			—			129			2,707
Reclassification from adoption of ASU 2018-02		(352	)		—			—			(352	)
Balances at end of period, net of tax	$	(904	)	$	(17,110	)	$	(671	)	$	(18,685	)

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Unrealized Gains (Losses) on Held to Maturity			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan			Total
2016	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(2,492	)	$	(17,110	)	$	(960	)	$	831		$	511		$	(19,220	)
Transfer of losses from available for sale to held to maturity		(245	)		—			—			—			—			(245	)
Other comprehensive income before reclassifications		—			—			—			(831	)		(511	)		(1,342	)
Accretion of unrealized losses transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			160			—			—			160
Reclassification adjustment for gains realized in income		(393	)		—			—						—			(393	)
Net current period other comprehensive income		(638	)		—			160			(831	)		(511	)		(1,820	)
Balances at end of period, net of tax	$	(3,130	)	$	(17,110	)	$	(800	)	$	—		$	—		$	(21,040	)

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Unrealized Gains (Losses) on Held to Maturity			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan		Total
2015	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(4,315	)	$	(17,110	)	$	—		$	916		$	511	$	(19,998	)
Transfer of losses from available for sale to held to maturity		999			—			(999	)		—			—		—
Other comprehensive income before reclassifications		916			—			—			120			—		1,036
Accretion of unrealized losses transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			39			—			—		39
Reclassification adjustment for gains realized in income		(92	)		—			—			(205	)		—		(297	)
Net current period other comprehensive income		1,823			—			(960	)		(85	)		—		778
Balances at end of period, net of tax	$	(2,492	)	$	(17,110	)	$	(960	)	$	831		$	511	$	(19,220	)

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. During 2016, with the termination and settlement of the postretirement plans, the disproportionate tax effect associated with these plans was reversed and recorded as a tax benefit.

The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) to net income for the year ended December 31, 2017:

		Amount Reclassified
		From Accumulated
Details About Accumulated Other		Other Comprehensive			Affected Line Item on the Statement Where
Comprehensive Income Components		Income to Net Income			Net Income is Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities		$	566		Net gains on securities available for sale
			(198	)	Tax (expense) benefit
Total reclassification during the period		$	368		Increase to net income

The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) to net income for the year ended December 31, 2016:

		Amount Reclassified
		From Accumulated
Details About Accumulated Other		Other Comprehensive			Affected Line Item on the Statement Where
Comprehensive Income Components		Income to Net Income			Net Income is Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities		$	604		Net gains on securities available for sale
			(211	)	Tax (expense) benefit
			393		Net of tax
Amortization of postretirement benefits prior service costs			1,278		Reduction of salaries & employee benefits expense
			(447	)	Tax (expense) benefit
			511		Disproportionate tax benefit effect from plan settlement
			1,342		Net of tax
Total reclassification during the period		$	1,735		Increase to net income

The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the year ended December 31, 2015:

		Amount Reclassified
		From Accumulated
Details About Accumulated Other		Other Comprehensive			Affected Line Item on the Statement Where
Comprehensive Income Components		Income to Net Income			Net Income is Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities		$	142		Net gains on securities available for sale
			(50	)	Tax (expense) benefit
			92		Net of tax
Amortization of postretirement benefits prior service costs			315		Reduction of salaries & employee benefits expense
			(110	)	Tax (expense) benefit
			205		Net of tax
Total reclassification during the period		$	297		Increase to net income

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.