REGULATORY CAPITAL MATTERS

12 Months Ended

Dec. 31, 2017

Banking And Thrift [Abstract]

REGULATORY CAPITAL MATTERS

16. REGULATORY CAPITAL MATTERS

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 is being phased in through January 1, 2019, when the full capital conservation buffer requirement will be effective. The capital conservation buffer for 2017 was 1.25% and the capital conservation buffer for 2018 is 1.875%.  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.

	December 31, 2017
											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)	$	292,928		14.70	%	$	184,235		9.25	%	$	199,173		10.00	%
Tier 1 capital (to risk-weighted assets)		271,777		13.64	%		144,400		7.25	%		159,338		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		271,777		13.64	%		114,525		5.75	%		129,463		6.50	%
Tier 1 capital (to average assets)**		271,777		10.42	%		104,308		4.00	%		130,385		5.00	%

**Tier 1 Leverage Capital Ratio

	December 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)	$	248,861		16.47	%	$	130,292		8.63	%	$	151,063		10.00	%
Tier 1 capital (to risk-weighted assets)		229,938		15.22	%		100,079		6.63	%		120,850		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		229,938		15.22	%		77,420		5.13	%		98,191		6.50	%
Tier 1 capital (to average assets)**		229,938		10.65	%		86,360		4.00	%		107,950		5.00	%

**Tier 1 Leverage Capital Ratio

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

	December 31, 2017			December 31, 2016
	(Dollars in thousands)
Total shareholders' equity	$	276,494		$	216,475
Add (deduct)
Accumulated other comprehensive loss		18,701			21,056
Intangible assets		(20,903	)		(3	)
Disallowed deferred tax assets		(2,515	)		(7,590	)
Disallowed capitalized mortgage loan servicing rights	—			—
Tier 1 Capital		271,777			229,938
Allowance for loan losses and allowance for unfunded lending commitments    limited to 1.25% of total risk-weighted assets		21,151			18,923
Total risk-based capital	$	292,928		$	248,861

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

	December 31, 2017
											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)	$	306,946		15.35	%	$	184,881		9.25	%	$	199,872		10.00	%
Tier 1 capital (to risk-weighted assets)		285,744		14.29	%		144,907		7.25	%		159,897		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		285,744		14.29	%		114,926		5.75	%		119,923		6.50	%
Tier 1 capital (to average assets)**		285,744		10.93	%		104,588		4.00	%		130,735		5.00	%

	December 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)	$	277,817		18.38	%	$	130,369		8.63	%	$	151,153		10.00	%
Tier 1 capital (to risk-weighted assets)		258,869		17.13	%		100,139		6.63	%		120,922		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		258,869		17.13	%		77,466		5.13	%		98,249		6.50	%
Tier 1 capital (to average assets)**		258,869		11.98	%		86,425		4.00	%		108,031		5.00	%

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

	December 31, 2017			December 31, 2016
	(Dollars in thousands)
Total shareholders' equity	$	294,265		$	249,806
Add (deduct)
Accumulated other comprehensive loss		18,701			21,040
Intangible assets		(23,416	)		(1,567	)
Disallowed deferred tax assets		(3,806	)		(10,410	)
Disallowed capitalized mortgage loan servicing rights		—			—
Tier 1 Capital		285,744			258,869
Allowance for loan losses and allowance for unfunded lending commitments    limited to 1.25% of total risk-weighted assets		21,202			18,948
Total risk-based capital	$	306,946		$	277,817

Management believes that as of December 31, 2017 and 2016, Home Savings and United Community meets all capital adequacy requirements to which they were subject.  As of December 31, 2017 and 2016, Home Savings and United Community were considered well capitalized. Management is not aware of any changes to this classification since that date.