United Community Banks, Inc.
UNITED COMMUNITY BANKS INC (Form: 10-Q, Received: 05/04/2011 17:28:10)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 10-Q
 
x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2011
 
OR
 
o      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Transition Period from ___________ to ___________
 
Commission file number 001-39095
 
 
UNITED COMMUNITY BANKS, INC.
 
 
(Exact name of registrant as specified in its charter)
 


Georgia
 
58-1807304
(State of Incorporation)
 
(I.R.S. Employer Identification No.)


125 Highway 515 East
   
Blairsville, Georgia
 
30512
Address of Principal
Executive Offices
 
(Zip Code)

(706) 781-2265
(Telephone Number)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
YES x   NO o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
YES o   NO o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o
                     Accelerated filer x
   
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller Reporting Company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
 
YES o   NO x
Common stock, par value $1 per share 104,568,558 shares
outstanding as of April 30, 2011
 
 
 

 
INDEX

   
PART I - Financial Information
 
   
            
Item 1.     Financial Statements.
 
   
           
       Consolidated Statement of Operations (unaudited) for the Three Months Ended
           March 31, 2011 and 2010
2
   
           
       Consolidated Balance Sheet at March 31, 2011 (unaudited), December 31, 2010
            (audited) and March 31, 2010 (unaudited)
3
   
           
       Consolidated Statement of Changes in Shareholders’ Equity (unaudited) for the
            Three Months Ended March 31, 2011 and 2010
4
   
      
       Consolidated Statement of Cash Flows (unaudited) for the Three Months Ended
           March 31, 2011 and 2010
5
   
          
       Notes to Consolidated Financial Statements
6
   
 
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.
27
   
 
Item 3.     Quantitative and Qualitative Disclosures About Market Risk.
52
   
 
Item 4.     Controls and Procedures.
52
   
   
PART II - Other Information
 
   
 
Item 1.     Legal Proceedings.
52
 
Item 1A.  Risk Factors.
52
 
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.
52
 
Item 3.     Defaults Upon Senior Securities.
52
 
Item 4.     (Removed and Reserved)
52
 
Item 5.     Other Information.
52
 
Item 6.     Exhibits.
52

 
 

 
Part I – Financial Information
 
Item 1 – Financial Statements
 
UNITED COMMUNITY BANKS, INC.
           
Consolidated Statement of Operations (Unaudited)
           
   
Three Months Ended
 
   
March 31,
 
(in thousands, except per share data)
 
2011
   
2010
 
             
Interest revenue:
           
    Loans, including fees
  $ 61,107     $ 72,215  
    Investment securities, including tax exempt of $259 and $311
    13,604       16,203  
    Federal funds sold, commercial paper and deposits in banks
    819       938  
                Total interest revenue
    75,530       89,356  
Interest expense:
               
    Deposits:
               
        NOW
    1,324       1,854  
        Money market
    2,028       1,757  
        Savings
    77       84  
        Time
    11,732       20,198  
                Total deposit interest expense
    15,161       23,893  
    Federal funds purchased, repurchase agreements and other short-term borrowings
    1,042       1,038  
    Federal Home Loan Bank advances
    590       977  
    Long-term debt
    2,780       2,662  
        Total interest expense
    19,573       28,570  
        Net interest revenue
    55,957       60,786  
    Provision for loan losses
    190,000       75,000  
        Net interest expense after provision for loan losses
    (134,043 )     (14,214 )
Fee revenue:
               
    Service charges and fees
    6,720       7,447  
    Mortgage loan and other related fees
    1,494       1,479  
    Brokerage fees
    677       567  
    Securities gains, net
    55       61  
    Other
    2,892       2,112  
        Total fee revenue
    11,838       11,666  
        Total revenue
    (122,205 )     (2,548 )
Operating expenses:
               
    Salaries and employee benefits
    24,924       24,360  
    Communications and equipment
    3,344       3,273  
    Occupancy
    4,074       3,814  
    Advertising and public relations
    978       1,043  
    Postage, printing and supplies
    1,118       1,225  
    Professional fees
    3,330       1,943  
    Foreclosed property
    64,899       10,813  
    FDIC assessments and other regulatory charges
    5,413       3,626  
    Amortization of intangibles
    762       802  
    Other
    6,429       3,921  
        Total operating expenses
    115,271       54,820  
    Loss from continuing operations before income taxes
    (237,476 )     (57,368 )
    Income tax benefit
    (94,990 )     (22,910 )
        Net loss from continuing operations
    (142,486 )     (34,458 )
        Loss from discontinued operations, net of income taxes
    -       (101 )
        Gain from sale of subsidiary, net of income taxes and selling costs
    -       1,266  
        Net loss
    (142,486 )     (33,293 )
    Preferred stock dividends and discount accretion
    2,778       2,572  
        Net loss available to common shareholders
  $ (145,264 )   $ (35,865 )
                 
Loss from continuing operations per common share - Basic / Diluted
  $ (1.57 )   $ (.39 )
Loss per common share - Basic / Diluted
    (1.57 )     (.38 )
Weighted average common shares outstanding - Basic / Diluted
    92,330       94,390  
                 
 
See accompanying notes to consolidated financial statements.
 
 
2

 
 
 
 UNITED COMMUNITY BANKS, INC.
                 
 Consolidated Balance Sheet
                 
   
March 31,
   
December 31,
   
March 31,
 
 (in thousands, except share and per share data)
 
2011
   
2010
   
2010
 
   
(unaudited)
   
(audited)
   
(unaudited)
 
 ASSETS
                 
   Cash and due from banks
  $ 153,891     $ 95,994     $ 105,613  
   Interest-bearing deposits in banks
    465,656       111,901       99,893  
   Federal funds sold, commercial paper and short-term investments
    470,087       441,562       183,049  
       Cash and cash equivalents
    1,089,634       649,457       388,555  
   Securities available for sale
    1,638,494       1,224,417       1,526,589  
   Securities held to maturity (fair value $248,361 and $267,988)
    245,430       265,807       -  
   Loans held for sale
    80,629       -       -  
   Mortgage loans held for sale
    25,364       35,908       21,998  
   Loans, net of unearned income
    4,194,372       4,604,126       4,992,045  
        Less allowance for loan losses
    133,121       174,695       173,934  
               Loans, net
    4,061,251       4,429,431       4,818,111  
   Assets covered by loss sharing agreements with the FDIC
    125,789       131,887       169,287  
   Premises and equipment, net
    179,143       178,239       181,217  
   Accrued interest receivable
    21,687       24,299       30,492  
   Goodwill and other intangible assets
    10,684       11,446       224,394  
   Foreclosed property
    54,378       142,208       136,275  
   Net deferred tax asset
    266,367       166,937       92,986  
   Other assets
    174,742       183,160       247,114  
       Total assets
  $ 7,973,592     $ 7,443,196     $ 7,837,018  
                         
 LIABILITIES AND SHAREHOLDERS' EQUITY
                       
 Liabilities:
                       
   Deposits:
                       
        Demand
  $ 864,708     $ 793,414     $ 740,727  
        NOW
    1,320,136       1,424,781       1,344,973  
        Money market
    967,938       891,252       729,283  
        Savings
    193,591       183,894       186,699  
        Time:
                       
             Less than $100,000
    1,576,505       1,496,700       1,643,059  
             Greater than $100,000
    990,289       1,002,359       1,132,034  
             Brokered
    684,581       676,772       710,813  
                      Total deposits
    6,597,748       6,469,172       6,487,588  
    Federal funds purchased, repurchase agreements, and other short-term borrowings
    102,107       101,067       102,480  
    Federal Home Loan Bank advances
    55,125       55,125       114,303  
    Long-term debt
    150,166       150,146       150,086  
    Unsettled securities purchases
    177,532       -       17,588  
    Accrued expenses and other liabilities
    40,766       32,171       39,078  
         Total liabilities
    7,123,444       6,807,681       6,911,123  
 Shareholders' equity:
                       
     Preferred stock, $1 par value; 10,000,000 shares authorized;
                       
          Series A; $10 stated value; 21,700 shares issued and outstanding
    217       217       217  
          Series B; $1,000 stated value; 180,000 shares issued and outstanding
    176,049       175,711       174,727  
          Series D; $1,000 stated value; 16,613 shares issued and outstanding
    16,613       -       -  
          Series F; $1,000 stated value; 195,872 shares issued and outstanding
    195,872       -       -  
          Series G; $1,000 stated value; 151,185 shares issued and outstanding
    151,185       -       -  
     Common stock, $1 par value; 200,000,000 shares authorized;
                       
         104,515,553, 94,685,003 and 94,175,857 shares issued and outstanding
    104,516       94,685       94,176  
     Common stock issuable; 397,138, 336,437 and 262,002 shares
    3,681       3,894       4,127  
     Capital surplus
    655,350       665,496       622,803  
     Accumulated deficit
    (480,831 )     (335,567 )     (15,481 )
     Accumulated other comprehensive income
    27,496       31,079       45,326  
         Total shareholders' equity
    850,148       635,515       925,895  
         Total liabilities and shareholders' equity
  $ 7,973,592     $ 7,443,196     $ 7,837,018  
                         
 
See accompanying notes to consolidated financial statements.
 
 
3

 
 
Consolidated Statement of Changes in Shareholders' Equity (Unaudited)
                           
For the Three Months Ended March 31,
                                       
 
                                                   
(Accumulated
   
Accumulated
       
   
Preferred Stock
         
Common
         
Deficit)
   
Other
       
(in thousands, except share
 
Series
   
Series
   
Series
   
Series
   
Series
   
Common
   
Stock
   
Capital
   
Retained
   
Comprehensive
 
  and per share data)     A        B       D       F       G    
Stock
   
Issuable
   
Surplus
   
Earnings
   
Income
   
Total
 
                                                                             
Balance, December 31, 2009
  $ 217     $ 174,408     $ -     $ -     $ -     $ 94,046     $ 3,597     $ 622,034     $ 20,384     $ 47,635     $ 962,321  
Comprehensive income:
                                                                                       
     Net loss
                                                                    (33,293 )             (33,293 )
      Other comprehensive income (loss):
                                                                                 
       Unrealized holding gains on
                                                                                       
          available for sale securities,
                                                                                       
          net of deferred tax expense
                                                                                       
           and reclassification adjustment
                                                                      783       783  
        Unrealized losses on derivative
                                                                                 
           financial instruments qualifying
                                                                                 
          as cash flow hedges, net of
                                                                                       
          deferred tax benefit
                                                                            (3,092 )     (3,092 )
               Comprehensive loss
                                                                    (33,293 )     (2,309 )     (35,602 )
Common stock issued to dividend
                                                                                 
       Reinvestment plan and employee
                                                                                 
      benefit plans (125,021 shares)
                                            124               387                       511  
Amortization of stock option and
                                                                                       
      restricted stock
                                                            832                       832  
Vesting of restricted stock (12,447
                                                                                 
      shares issued, 16,162 shares
                                                                                       
     deferred)
                                            6       444       (450 )                     -  
Deferred compensation plan, net,
                                                                                 
       including dividend equivalents
                                              86                               86  
Dividends on Series A preferred stock
                                                              (3 )             (3 )
Dividends on Series B preferred stock         319                                                       (2,569 )             (2,250 )
Balance, March 31, 2010
  $ 217     $ 174,727     $ -     $ -     $ -     $ 94,176     $ 4,127     $ 622,803     $ (15,481 )   $ 45,326     $ 925,895  
Balance, December 31, 2010
  $ 217     $ 175,711     $ -     $ -     $ -     $ 94,685     $ 3,894     $ 665,496     $ (335,567 )   $ 31,079     $ 635,515  
Comprehensive loss:
                                                                                       
     Net loss
                                                                    (142,486 )             (142,486 )
     Other comprehensive loss:
                                                                                       
       Unrealized holding gains on
                                                                                       
          available for sale securities,
                                                                                       
          net of deferred tax expense
                                                                                       
           and reclassification adjustment
                                                                      (1,003 )     (1,003 )
       Unrealized losses on derivative
                                                                                 
           financial instruments qualifying
                                                                                 
         as cash flow hedges, net of
                                                                                       
         deferred tax benefit
                                                                            (2,580 )     (2,580 )
Comprehensive loss
                                                                    (142,486 )     (3,583 )     (146,069 )
Preferred for common equity exchange
                                                                                 
       related to tax benefits preservation
                                                                                 
       plan (7,755,631 common shares)
              16,613                       (7,756 )             (8,857 )                     -  
Common stock issued to dividend
                                                                                 
       reinvestment plan and employee
                                                                                 
       benefit plans (230,096 shares)
                                      232               143                       375  
Common and preferred stock issued
                                                                                 
       (17,338,497 common shares)
                            195,872       151,185       17,338               (1,866 )                     362,529  
Amortization of stock options and
                                                                                 
      restricted stock awards
                                                            549                       549  
Vesting of restricted stock (7,097
                                                                                       
      shares issued, 31,910 shares
                                                                                       
      deferred)
                                            7       54       (61 )                     -  
Deferred compensation plan, net,
                                                                                 
       including dividend equivalents
                                              65                               65  
Shares issued from deferred
                                                                                       
       compensation plan (10,491 shares)
                                      10       (332 )     322                       -  
Tax on option exercise and restricted
                                                                                 
      stock vesting
                                                            (376 )                     (376 )
Dividends on Series A preferred stock
                                                              (3 )             (3 )
Dividends on Series B preferred stock
      338                                                       (2,602 )             (2,264 )
Dividends on Series D preferred stock
                                                                    (173             (173
Balance, March 31, 2011
  $ 217     $ 176,049     $ 16,613     $ 195,872     $ 151,185     $ 104,516     $ 3,681     $ 655,350     $ (480,831 )   $ 27,496     $ 850,148  
 
See accompanying notes to consolidated financial statements .
 
 
4

 
 
UNITED COMMUNITY BANKS, INC.
           
Consolidated Statement of Cash Flows (Unaudited)
           
             
   
Three Months Ended
 
   
March 31,
 
(in thousands)
 
2011
   
2010
 
Operating activities:
           
      Net loss
  $ (142,486 )   $ (33,293 )
      Adjustments to reconcile net loss to net cash provided by operating activities:
               
            Depreciation, amortization and accretion
    4,743       3,814  
            Provision for loan losses
    190,000       75,000  
            Stock based compensation
    549       832  
            Securities gains, net
    (55 )     (61 )
            Losses and write downs on sales of other real estate owned
    60,605       8,097  
            Gain from sale of subsidiary
    -       (2,110 )
            Changes in assets and liabilities:
               
                  Other assets and accrued interest receivable
    (90,321 )     (11,557 )
                  Accrued expenses and other liabilities
    6,518       (4,956 )
                  Mortgage loans held for sale
    10,544       8,228  
Net cash provided by operating activities
    40,097       43,994  
                 
Investing activities:
               
      Investment securities held to maturity:
               
            Proceeds from maturities and calls
    21,116       -  
            Purchases
    (1,500 )     -  
      Investment securities available for sale:
               
            Proceeds from sales
    51,240       40,817  
            Proceeds from maturities and calls
    116,175       200,578  
            Purchases
    (405,979 )     (219,354 )
      Net decrease in loans
    93,949       65,889  
      Proceeds from sales of premises and equipment
    160       8  
      Purchases of premises and equipment
    (3,604 )     (2,024 )
      Net cash received from sale of subsidiary
    -       290  
      Proceeds from sale of other real estate
    36,003       21,692  
Net cash (used in) provided by investing activities
    (92,440 )     107,896  
                 
Financing activities:
               
      Net change in deposits
    128,576       (139,051 )
      Net change in federal funds purchased, repurchase agreements, and other short-term borrowings
    1,040       1,091  
      Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans
    375       511  
      Proceeds from issuance of common and preferred stock, net of offering costs
    362,529       -  
      Cash dividends on preferred stock
    -       (2,253 )
Net cash provided by (used in) financing activities
    492,520       (139,702 )
                 
Net change in cash and cash equivalents
    440,177       12,188  
                 
      Cash and cash equivalents at beginning of period
    649,457       376,367  
                 
Cash and cash equivalents at end of period
  $ 1,089,634     $ 388,555  
                 
Supplemental disclosures of cash flow information:
               
      Cash paid during the period for:
               
         Interest
  $ 17,936     $ 33,283  
         Income taxes
    1,287       767  
         Unsettled securities purchases
    177,532       17,588  
                 


See accompanying notes to consolidated financial statements .
 
 
5

 
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
Note 1 – Accounting Policies
 
The accounting and financial reporting policies of United Community Banks, Inc. (“United”) and its subsidiaries conform to accounting principles generally accepted in the United States of America (“GAAP”) and general banking industry practices.  The accompanying interim consolidated financial statements have not been audited.  All material intercompany balances and transactions have been eliminated.  A more detailed description of United’s accounting policies is included in the 2010 annual report filed on Form 10-K.
 
In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods.
 
Foreclosed property is initially recorded at fair value, less estimated costs to sell.  If the fair value, less estimated costs to sell at the time of foreclosure, is less than the loan balance, the deficiency is charged against the allowance for loan losses.  If the fair value, less cost to sell, of the foreclosed property decreases during the holding period, a valuation allowance is established with a charge to operating expenses.  When the foreclosed property is sold, a gain or loss is recognized on the sale for the difference between the sales proceeds and the carrying amount of the property.  Financed sales of foreclosed property are accounted for in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification Topic 360, Subtopic 20, Real Estate Sales (“ASC 360-20”) .
 
Note 2 – Accounting Standards Updates
 
In April 2011, the FASB issued Accounting Standards Update No. 2011-02, A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring (“ASU No. 2011-02”).  ASU No. 2011-02 requires a creditor to separately conclude that 1.) the restructuring constitutes a concession and 2.) the debtor is experiencing financial difficulties in order for a modification to be considered a troubled debt restructuring (“TDR”).  The guidance was issued to provide clarification and to address diversity in practice in identifying TDR’s.  It is effective for United in the third quarter of 2011 and will be applied retrospectively to the beginning of the year.  Although evaluation of the impact is not complete, it is not expected to have a material impact on United’s results of operations, financial position, or disclosures.
 
In April 2011, the FASB issued Accounting Standards Update No. 2011-03, Reconsideration of Effective Control in Repurchase Agreements (“ASU No. 2011-03”).  ASU No. 2011-03 removes from the assessment of effective control the criterion related to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee.  In addition, this guidance also eliminates the requirement to demonstrate that a transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.  It is effective for United for the first quarter of 2012, and is not expected to have a material impact on United’s results of operations, financial position, or disclosures.
 
Note 3 – Mergers and Acquisitions
 
On June 19, 2009, United Community Bank (“UCB” or the “Bank”) purchased substantially all the assets and assumed substantially all the liabilities of Southern Community Bank (“SCB”) from the Federal Deposit Insurance Corporation (“FDIC”), as Receiver of SCB.  UCB and the FDIC entered loss sharing agreements regarding future losses incurred on loans and foreclosed loan collateral existing at June 19, 2009.  Under the terms of the loss sharing agreements, the FDIC will absorb 80 percent of losses and share 80 percent of loss recoveries on the first $109 million of losses and, absorb 95 percent of losses and share in 95 percent of loss recoveries on losses exceeding $109 million.  The term for loss sharing on 1-4 Family loans is ten years, while the term for loss sharing on all other loans is five years.
 
Under the loss sharing agreement, the portion of the losses expected to be indemnified by FDIC is considered an indemnification asset in accordance with ASC 805 Business Combinations .  The indemnification asset, referred to as “estimated loss reimbursement from the FDIC” is included in the balance of “Assets covered by loss sharing agreements with the FDIC” on the Consolidated Balance Sheet.  The indemnification asset was recognized at fair value, which was estimated at the acquisition date based on the terms of the loss sharing agreement.  The indemnification asset is expected to be collected over a four-year average life.  No valuation allowance was required.
 
Loans, foreclosed property and the estimated FDIC reimbursement resulting from the loss sharing agreements with the FDIC are reported as “assets covered by loss sharing agreements with the FDIC” in the consolidated balance sheet.
 
 
6

 
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
The table below shows the components of covered assets at March 31, 2011 (in thousands) .
 
 (in thousands)
 
Purchased
Impaired
Loans
   
Other Purchased Loans
   
Other
   
Total
 
                         
 Commercial (secured by real estate)
  $ -     $ 35,129     $ -     $ 35,129  
 Commercial (commercial and industrial)
    -       3,478       -       3,478  
 Construction and land development
    1,644       13,335       -       14,979  
 Residential mortgage
    145       9,322       -       9,467  
 Installment
    7       229       -       236  
      Total covered loans
    1,796       61,493       -       63,289  
 Covered forclosed property
    -       -       30,833       30,833  
 Estimated loss reimbursement from the FDIC
    -       -       31,667       31,667  
      Total covered assets
  $ 1,796     $ 61,493     $ 62,500     $ 125,789  
                                 
 
Note 4 – Securities
 
During the second quarter of 2010, securities available for sale with a fair value of $315 million were transferred to held to maturity.  The securities were transferred at their fair value on the date of transfer.  The unrealized gain of $7.1 million on the transferred securities on the date of transfer is being amortized into interest revenue as an adjustment to the yield on those securities over the remaining life of the transferred securities.  Securities are classified as held to maturity when management has the positive intent and ability to hold them until maturity.  Securities held to maturity are carried at amortized cost.
 
The amortized cost, gross unrealized gains and losses and fair value of securities held to maturity at March 31, 2011 and December 31, 2010, are as follows (in thousands) .  There were no securities classified as held to maturity at March 31, 2010.
 
         
Gross
   
Gross
       
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
As of March 31, 2011
 
Cost
   
Gains
   
Losses
   
Value
 
        U.S. Government agencies
  $ 4,989     $ 12     $ -     $ 5,001  
        State and political subdivisions
    48,497       616       731       48,382  
        Mortgage-backed securities (1)
    191,944       3,041       7       194,978  
                                 
           Total
  $ 245,430     $ 3,669     $ 738     $ 248,361  
                                 
As of December 31, 2010
                               
        U.S. Government agencies
  $ 11,939     $ 79     $ -     $ 12,018  
        State and political subdivisions
    47,007       416       1,005       46,418  
        Mortgage-backed securities (1)
    206,861       2,700       9       209,552  
                                 
           Total
  $ 265,807     $ 3,195     $ 1,014     $ 267,988  
                                 
(1)  All are residential type mortgage-backed securities
                         
                                 

 
 
7

 
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
The cost basis, unrealized gains and losses, and fair value of securities available for sale at March 31, 2011, December 31, 2010 and March 31, 2010 are presented below (in thousands) .
 
         
Gross
   
Gross
       
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
As of March 31, 2011
 
Cost
   
Gains
   
Losses
   
Value
 
        U.S. Government agencies
  $ 94,966     $ 16     $ 1,204     $ 93,778  
        State and political subdivisions
    26,870       983       20       27,833  
        Mortgage-backed securities (1)
    1,388,702       27,617       1,474       1,414,845  
        Other
    103,408       150       1,520       102,038  
           Total
  $ 1,613,946     $ 28,766     $ 4,218     $ 1,638,494  
                                 
As of December 31, 2010
                               
        U.S. Government agencies
  $ 99,969     $ 67     $ 1,556     $ 98,480  
        State and political subdivisions
    27,600       878       36       28,442  
        Mortgage-backed securities (1)
    963,475       29,204       1,671       991,008  
        Other
    107,811       192       1,516       106,487  
           Total
  $ 1,198,855     $ 30,341     $ 4,779     $ 1,224,417  
                                 
As of March 31, 2010
                               
        U.S. Government agencies
  $ 306,916     $ 553     $ 891     $ 306,578  
        State and political subdivisions
    63,175       1,450       81       64,544  
        Mortgage-backed securities (1)
    1,101,456       41,754       1,031       1,142,179  
        Other
    13,006       290       8       13,288  
           Total
  $ 1,484,553     $ 44,047     $ 2,011     $ 1,526,589  
                                 
(1)  All are residential type mortgage-backed securities
                         
                                 
 
The following table summarizes held to maturity securities in an unrealized loss position as of March 31, 2011 and December 31, 2010 (in thousands) .
 
   
Less than 12 Months
   
12 Months or More
   
Total
       
As of March 31, 2011
 
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
   
Fair Value
   
Unrealized Loss
 
State and political subdivisions
  $ 21,313     $ 731     $