United Community Banks, Inc.
UNITED COMMUNITY BANKS INC (Form: 10-Q, Received: 08/11/2014 13:55:00)



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 June 30, 2014
 
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 001-35095
 
 
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 x   NO o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, 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 x Accelerated filer o
   
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 50,062,635 shares voting and 10,080,787 shares non-voting outstanding as of July 31, 2014.
 
1
 

 


         
INDEX
   
         
   
         
     
         
     
3
         
     
4
         
     
5
         
     
6
         
     
7
         
     
8
         
   
36
         
   
59
         
   
59
         
   
         
   
60
   
60
   
60
   
60
   
60
   
60
   
61
 
2
 

 


Part I – Financial Information
Item 1 – Financial Statements
 
UNITED COMMUNITY BANKS, INC.
                                 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
(in thousands, except per share data)
 
2014
   
2013
   
2014
   
2013
 
Interest revenue:
                       
Loans, including fees
  $ 48,261     $ 50,730     $ 95,949     $ 101,665  
Investment securities, including tax exempt of $193, $210, $381 and $422
    12,165       10,074       23,772       20,018  
Deposits in banks and short-term investments
    980       916       1,823       1,786  
Total interest revenue
    61,406       61,720       121,544       123,469  
Interest expense:
                               
Deposits:
                               
NOW
    411       419       851       873  
Money market
    757       534       1,320       1,096  
Savings
    21       36       41       72  
Time
    2,018       2,950       3,789       6,241  
Total deposit interest expense
    3,207       3,939       6,001       8,282  
Short-term borrowings
    908       522       1,748       1,038  
Federal Home Loan Bank advances
    80       30       138       49  
Long-term debt
    2,638       2,666       5,272       5,328  
Total interest expense
    6,833       7,157       13,159       14,697  
Net interest revenue
    54,573       54,563       108,385       108,772  
Provision for credit losses
    2,200       48,500       4,700       59,500  
Net interest revenue after provision for credit losses
    52,373       6,063       103,685       49,272  
Fee revenue:
                               
Service charges and fees
    8,527       7,972       16,425       15,375  
Mortgage loan and other related fees
    1,877       3,003       3,231       5,658  
Brokerage fees
    1,245       1,063       2,422       1,830  
Securities gains, net
    4,435             4,652       116  
Loss from prepayment of debt
    (4,446 )           (4,446 )      
Other
    2,505       3,905       4,035       5,875  
Total fee revenue
    14,143       15,943       26,319       28,854  
Total revenue
    66,516       22,006       130,004       78,126  
Operating expenses:
                               
Salaries and employee benefits
    24,287       24,734       48,683       48,326  
Communications and equipment
    3,037       3,468       6,276       6,514  
Occupancy
    3,262       3,449       6,640       6,816  
Advertising and public relations
    1,139       1,037       1,765       1,975  
Postage, printing and supplies
    804       894       1,580       1,757  
Professional fees
    2,172       2,499       3,599       4,865  
Foreclosed property
    102       5,151       218       7,484  
FDIC assessments and other regulatory charges
    1,425       2,505       2,778       5,010  
Amortization of intangibles
    361       491       748       1,196  
Other
    3,943       4,595       7,295       8,650  
Total operating expenses
    40,532       48,823       79,582       92,593  
Net income (loss) before income taxes
    25,984       (26,817 )     50,422       (14,467 )
Income tax expense (benefit)
    9,627       (256,781 )     18,665       (256,196 )
Net income
    16,357       229,964       31,757       241,729  
Preferred stock dividends and discount accretion
          3,055       439       6,107  
Net income available to common shareholders
  $ 16,357     $ 226,909     $ 31,318     $ 235,622  
Earnings per common share:
                               
Basic
  $ .27     $ 3.90     $ .52     $ 4.05  
Diluted
    .27       3.90       .52       4.05  
Weighted average common shares outstanding:
                               
Basic
    60,712       58,141       60,386       58,111  
Diluted
    60,714       58,141       60,388       58,111  
 
See accompanying notes to consolidated financial statements.
 
3
 

 

 
                                     
UNITED COMMUNITY BANKS, INC.              
                 
                   
(in thousands)
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
         
Tax
               
Tax
       
   
Before-tax
   
(Expense)
   
Net of Tax
   
Before-tax
   
(Expense)
   
Net of Tax
 
2014
 
Amount
   
Benefit
   
Amount
   
Amount
   
Benefit
   
Amount
 
Net income
  $ 25,984     $ (9,627 )   $ 16,357     $ 50,422     $ (18,665 )   $ 31,757  
Other comprehensive income:
                                               
Unrealized gains (losses) on available-for-sale securities:
                                               
Unrealized holding gains (losses) arising during period
    11,184       (4,216 )     6,968       15,053       (5,657 )     9,396  
Reclassification adjustment for gains included in net income
    (4,435 )     1,725       (2,710 )     (4,652 )     1,817       (2,835 )
Net unrealized gains (losses)
    6,749       (2,491 )     4,258       10,401       (3,840 )     6,561  
Amortization of gains included in net income on available-for-sale securities transferred to held-to-maturity
    409       (154 )     255       739       (277 )     462  
Net unrealized gains
    409       (154 )     255       739       (277 )     462  
Amounts reclassified into net income on cash flow hedges
    573       (223 )     350       670       (261 )     409  
Unrealized losses on derivative financial instruments accounted for as cash flow hedges
    (3,547 )     1,380       (2,167 )     (6,379 )     2,482       (3,897 )
Net unrealized losses
    (2,974 )     1,157       (1,817 )     (5,709 )     2,221       (3,488 )
Net actuarial gain on defined benefit pension plan
                      296       (115 )     181  
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan
    92       (36 )     56       183       (71 )     112  
Net defined benefit pension plan activity
    92       (36 )     56       479       (186 )     293  
Total other comprehensive income
    4,276       (1,524 )     2,752       5,910       (2,082 )     3,828  
Comprehensive income
  $ 30,260     $ (11,151 )   $ 19,109     $ 56,332     $ (20,747 )   $ 35,585  
2013
                                               
Net (loss) income
  $ (26,817 )   $ 256,781     $ 229,964     $ (14,467 )   $ 256,196     $ 241,729  
Other comprehensive income (loss):
                                               
Unrealized (losses) gains on available-for-sale securities:
                                               
Unrealized holding gains (losses) arising during period
    (15,358 )     5,798       (9,560 )     (13,717 )     5,177       (8,540 )
Reclassification adjustment for gains included in net income
                      (116 )     45       (71 )
Adjustment of valuation allowance for the change in deferred taxes arising from unrealized gains and losses on available-for-sale securities and release of valuation allowance
          (3,526 )     (3,526 )           (2,950 )     (2,950 )
Net unrealized gains (losses)
    (15,358 )     2,272       (13,086 )     (13,833 )     2,272       (11,561 )
 
                                               
Amortization of gains included in net income on available-for-sale securities transferred to held-to-maturity
    (271 )     103       (168 )     (590 )     227       (363 )
Adjustment of valuation allowance for the change in deferred taxes arising from the amortization of gains included in net income (loss) on available-for-sale securities transferred to held-to-maturity and release of valuation allowance
          1,415       1,415             1,293       1,293  
Net unrealized losses
    (271 )     1,518       1,247       (590 )     1,520       930  
Amounts reclassified into net income on cash flow hedges
    (306 )     119       (187 )     (844 )     328       (516 )
Unrealized gains on derivative financial instruments accounted for as cash flow hedges
    11,672       (4,540 )     7,132       12,102       (4,707 )     7,395  
Adjustment of valuation allowance for the change in deferred taxes arising from unrealized gains and losses and amortization of gains included in net income on cash flow hedges and release of valuation allowance
          13,740       13,740             13,698       13,698  
Net unrealized gains
    11,366       9,319       20,685       11,258       9,319       20,577  
Net actuarial loss on defined benefit pension plan
                      (415 )     161       (254 )
Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan
    133       (52 )     81       265       (103 )     162  
Adjustment of valuation allowance for the change in deferred taxes arising from reclassification of unamortized prior service cost and actuarial losses and amortization of prior service cost and actuarial losses and release of valuation allowance
          110       110                    
Net defined benefit pension plan activity
    133       58       191       (150 )     58       (92 )
Total other comprehensive income (loss)
    (4,130 )     13,167       9,037       (3,315 )     13,169       9,854  
Comprehensive income
  $ (30,947 )   $ 269,948     $ 239,001     $ (17,782 )   $ 269,365     $ 251,583  
 
See accompanying notes to consolidated financial statements.
 
4
 

 

 
                       
UNITED COMMUNITY BANKS, INC.
                   
                 
                   
   
June 30,
   
December 31,
   
June 30,
 
(in thousands, except share and per share data)
 
2014
   
2013
   
2013
 
ASSETS
                 
Cash and due from banks
  $ 91,791     $ 71,230     $ 62,564  
Interest-bearing deposits in banks
    100,270       119,669       141,016  
Short-term investments
    47,999       37,999       57,000  
Cash and cash equivalents
    240,060       228,898       260,580  
Securities available for sale
    1,741,268       1,832,217       1,937,264  
Securities held to maturity (fair value $458,864, $485,585 and $226,695)
    448,752       479,742       214,947  
Mortgage loans held for sale
    14,918       10,319       19,150  
Loans, net of unearned income
    4,410,285       4,329,266       4,189,368  
Less allowance for loan losses
    (73,248 )     (76,762 )     (81,845 )
Loans, net
    4,337,037       4,252,504       4,107,523  
Assets covered by loss sharing agreements with the FDIC
    3,595       22,882       35,675  
Premises and equipment, net
    161,614       163,589       167,197  
Bank owned life insurance
    80,922       80,670       82,276  
Accrued interest receivable
    19,141       19,598       19,279  
Intangible assets
    2,731       3,480       4,315  
Foreclosed property
    2,969       4,221       3,936  
Net deferred tax asset
    233,149       258,518       272,287  
Derivative financial instruments
    22,024       23,833       9,017  
Other assets
    43,886       44,948       29,189  
Total assets
  $ 7,352,066     $ 7,425,419     $ 7,162,635  
LIABILITIES AND SHAREHOLDERS EQUITY
                       
Liabilities:
                       
Deposits:
                       
Demand
  $ 1,519,635     $ 1,388,512     $ 1,349,804  
NOW
    1,334,883       1,427,939       1,225,664  
Money market
    1,245,912       1,227,575       1,167,889  
Savings
    279,203       251,125       247,821  
Time:
                       
Less than $100,000
    805,289       892,961       982,009  
Greater than $100,000
    554,310       588,689       664,112  
Brokered
    424,313       424,704       374,530  
Total deposits
    6,163,545       6,201,505       6,011,829  
Short-term borrowings
    76,256       53,241       54,163  
Federal Home Loan Bank advances
    175,125       120,125       70,125  
Long-term debt
    129,865       129,865       124,845  
Derivative financial instruments
    36,545       46,232       29,330  
Unsettled securities purchases
    7,264       29,562       1,582  
Accrued expenses and other liabilities
    41,497       49,174       41,458  
Total liabilities
    6,630,097       6,629,704       6,333,332  
Shareholders equity:
                       
Preferred stock, $1 par value; 10,000,000 shares authorized;
                       
Series A; $10 stated value; 0, 0 and 21,700 shares issued and outstanding
                217  
Series B; $1,000 stated value; 0, 105,000 and 180,000 shares issued and outstanding
          105,000       179,323  
Series D; $1,000 stated value; 0, 16,613 and 16,613 shares issued and outstanding
          16,613       16,613  
Common stock, $1 par value; 100,000,000 shares authorized; 50,058,295, 46,243,345 and 43,356,492 shares issued and outstanding
    50,058       46,243       43,356  
Common stock, non-voting, $1 par value; 26,000,000 shares authorized; 10,080,787, 13,188,206 and 14,474,810 shares issued and outstanding
    10,081       13,188       14,475  
Common stock issuable; 314,039, 241,832 and 271,215 shares
    4,649       3,930       4,705  
Capital surplus
    1,091,780       1,078,676       1,057,931  
Accumulated deficit
    (418,583 )     (448,091 )     (473,531 )
Accumulated other comprehensive loss
    (16,016 )     (19,844 )     (13,786 )
Total shareholders equity
    721,969       795,715       829,303  
Total liabilities and shareholders equity
  $ 7,352,066     $ 7,425,419     $ 7,162,635  
 
See accompanying notes to consolidated financial statements.
 
5
 

 

 
UNITED COMMUNITY BANKS, INC.
For the Six Months Ended June 30,
                                                             
                                                   
Accumulated
       
      Preferred Stock          
Non-Voting
   
Common
               
Other
       
(in thousands, except share
 
Series
   
Series
   
Series
   
Common
   
Common
   
Stock
   
Capital
   
Accumulated
   
Comprehensive
       
and per share data)
    A       B       D    
Stock
   
Stock
   
Issuable
   
Surplus
   
Deficit
   
Income (Loss)
   
Total
 
Balance, December 31, 2012
  $ 217     $ 178,557     $ 16,613     $ 42,424     $ 15,317     $ 3,119     $ 1,057,951     $ (709,153 )   $ (23,640 )   $ 581,405  
Net income
                                                            241,729               241,729  
Other comprehensive income
                                                                    9,854       9,854  
Common stock issued to dividend reinvestment plan and employee benefit plans (35,667 shares)
                            35                       348                       383  
Conversion of non-voting common stock to voting (841,984 shares)
                            842       (842 )                                      
Amortization of stock options and restricted stock awards
                                                    1,359                       1,359  
Vesting of restricted stock (50,450 shares issued, 133,914 shares deferred)
                            50               1,934       (2,161 )                     (177 )
Deferred compensation plan,  net, including dividend equivalents
                                            91                               91  
Shares issued from deferred compensation plan (4,521 shares)
                            5               (439 )     434                        
Preferred stock dividends:
                                                                               
Series A
                                                            (6 )             (6 )
Series B
            766                                               (5,266 )             (4,500 )
Series D
                                                            (835 )             (835 )
Balance, June 30, 2013
  $ 217     $ 179,323     $ 16,613     $ 43,356     $ 14,475     $ 4,705     $ 1,057,931     $ (473,531 )   $ (13,786 )   $ 829,303  
Balance, December 31, 2013
  $     $ 105,000     $ 16,613     $ 46,243     $ 13,188     $ 3,930     $ 1,078,676     $ (448,091 )   $ (19,844 )   $ 795,715  
Net income
                                                            31,757               31,757  
Other comprehensive income
                                                                    3,828       3,828  
Redemption of Series B preferred stock (105,000 shares)
            (105,000 )                                                             (105,000 )
Redemption of Series D preferred stock (16,613 shares)
                    (16,613 )                                                     (16,613 )
Cash dividends declared on common stock ($.03 per share)
                                                            (1,810 )             (1,810 )
Common stock issued at market (640,000 shares)
                            640                       11,566                       12,206  
Common stock issued to dividend reinvestment plan and to employee benefit plans (19,299 shares)
                            19                       309                       328  
Conversion of non-voting common stock to voting (3,107,419 shares)
                            3,107       (3,107 )                                      
Amortization of stock options and restricted stock awards
                                                    2,228                       2,228  
Vesting of restricted stock, net of shares surrendered to cover payroll taxes (40,751 shares issued, 72,797 shares deferred)
                            41               749       (1,140 )                     (350 )
Deferred compensation plan, net, including dividend equivalents
                                            119                               119  
Shares issued from deferred compensation plan (7,481 shares)
                            8               (149 )     141                        
Preferred stock dividends:
                                                                               
Series B
                                                            (159 )             (159 )
Series D
                                                            (280 )             (280 )
Balance, June 30, 2014
  $     $     $     $ 50,058     $ 10,081     $ 4,649     $ 1,091,780     $ (418,583 )   $ (16,016 )   $ 721,969  
 
See accompanying notes to consolidated financial statements.
 
6
 

 

 
             
   
Six Months Ended
June 30,
 
(in thousands)
 
2014
   
2013
 
Operating activities:
           
Net income
  $ 31,757     $ 241,729  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation, amortization and accretion
    9,966       14,574  
Provision for credit losses
    4,700       59,500  
Stock based compensation
    2,228       1,359  
Deferred income tax expense (benefit)
    18,716       (258,987 )
Securities gains, net
    (4,652 )     (116 )
Loss on prepayment of borrowings
    4,446        
Net (gains) losses on sales of foreclosed property
    (362 )     5,460  
Changes in assets and liabilities:
               
Other assets and accrued interest receivable
    (2,567 )     12,872  
Accrued expenses and other liabilities
    (19,691 )     19,487  
Mortgage loans held for sale
    (4,599 )     9,671  
Net cash provided by operating activities
    39,942       105,549  
Investing activities:
               
Investment securities held-to-maturity:
               
Proceeds from maturities and calls
    31,159       33,141  
Purchases
    (173 )     (4,993 )
Investment securities available-for-sale:
               
Proceeds from sales
    390,227       15,751  
Proceeds from maturities and calls
    111,378       260,967  
Purchases
    (411,443 )     (397,907 )
Net increase in loans
    (55,199 )     (203,903 )
Proceeds from note sales
    4,561       91,913  
Cash paid for acquisition
    (31,243 )      
Funds collected from FDIC under loss sharing agreements
    2,112       3,714  
Proceeds from sales of premises and equipment
    2,392       1,547  
Purchases of premises and equipment
    (1,934 )     (4,488 )
Proceeds from sale of other real estate
    5,877       21,815  
Net cash provided by (used in) investing activities
    47,714       (182,443 )
Financing activities:
               
Net change in deposits
    (37,960 )     59,689  
Net change in short-term borrowings
    18,569       1,589  
Proceeds from Federal Home Loan Bank advances
    560,000       485,000  
Repayment of Federal Home Loan Bank advances
    (505,000 )     (455,000 )
Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans
    328       383  
Retirement of preferred stock
    (121,613 )      
Issuance of common stock
    12,206        
Cash dividends on common stock
    (1,810 )      
Cash dividends on preferred stock
    (1,214 )     (5,336 )
Net cash (used in) provided by financing activities
    (76,494 )     86,325  
Net change in cash and cash equivalents
    11,162       9,431  
Cash and cash equivalents at beginning of period
    228,898       251,149  
Cash and cash equivalents at end of period
  $ 240,060     $ 260,580  
Supplemental disclosures of cash flow information:
               
Cash paid during the period for:
               
Interest
  $ 13,558     $ 16,768  
Income taxes
    2,044       2,355  
Unsettled securities purchases
    7,264       1,582  
Transfers of loans to foreclosed property
    6,054       15,721  
 
See accompanying notes to consolidated financial statements.
 
7
 

 

 
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
 
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 its Annual Report on Form 10-K for the year ended December 31, 2013.
 
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.
 
Reclassifications
 
Certain 2013 amounts have been reclassified to conform to the 2014 presentation.  During the fourth quarter of 2013, United reclassified hedge ineffectiveness gains and losses from other fee revenue to net interest revenue.  The impact of the reclassification has been reflected in all periods and was not material to any period.
 
Note 2 –Accounting Standards Updates and Recently Adopted Standards
 
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers .  This ASU provides guidance on the recognition of revenue from contracts with customers.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  This guidance is effective for public entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and will be applied retrospectively either to each prior reporting period or with a cumulative effect recognized at the date of initial application.  United is in the process of evaluating this guidance, but its effect on United’s financial condition or results of operations is not expected to be material.
 
In June 2014, FASB issued ASU No. 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures.   This ASU changes the accounting for repurchase-to-maturity transactions to secured borrowing accounting.  For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting.  The ASU also requires new disclosures for repurchase agreements, securities lending transactions and repurchase-to-maturity transactions.  The Update is effective for the first interim or annual period beginning after December 15, 2014.  United is currently evaluating the guidance’s impact on its financial position, results of operation and disclosures.
 
 In June 2014, FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.   This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and should not be reflected in estimating the grant-date fair value of the award.  The standard is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  This guidance is not expected to have a material impact on United’s financial position, results of operations or disclosures.
 
Note 3 – Acquisition
 
On June 26, 2014, United completed the acquisition of substantially all of the assets of Business Carolina, Inc., a specialty SBA/USDA lender headquartered in Columbia, South Carolina.  United is still in the process of determining the values of the assets acquired.  On the closing date, United paid $31.2 million in cash for loans of $26.2 million, accrued interest of $83,000, servicing rights of $2.13 million and premises and equipment of $2.84 million.  Final settlement, which is not expected to be materially different from the initial settlement, is scheduled to occur within 60 days of closing. United has not identified any material separately identifiable intangible assets resulting from the acquisition.
 
8
 

 

 
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
Note 4 – Balance Sheet Offsetting
 
United enters into reverse repurchase agreements in order to invest short-term funds.  In addition, United enters into repurchase agreements and reverse repurchase agreements with the same counterparty in transactions commonly referred to as collateral swaps that are subject to master netting agreements under which the balances are netted in the balance sheet in accordance with ASC 210-20, Offsetting.
 
The following table presents a summary of amounts outstanding under reverse repurchase agreements and derivative financial instruments including those entered into in connection with the same counterparty under master netting agreements as of June 30, 2014, December 31, 2013 and June 30, 2013 (in thousands) .
                                   
       
Gross
                         
   
Gross
 
Amounts
       
Gross Amounts not Offset
       
   
Amounts of
 
Offset on the
       
in the Balance Sheet
       
   
Recognized
 
Balance
 
Net Asset
 
Financial
 
Collateral
       
June 30, 2014
 
Assets
 
Sheet
 
Balance
 
Instruments
 
Received
 
Net Amount
 
                                       
Repurchase agreements / reverse repurchase agreements
    $ 420,000     $ (375,000 )   $ 45,000     $     $ (48,933 )   $  
Derivatives
      22,024             22,024       (1,962 )     (162 )     19,900  
Total
    $ 442,024     $ (375,000 )   $ 67,024     $ (1,962 )   $ (49,095 )   $ 19,900  
Weighted average interest rate of reverse repurchase agreements
      1.09 %                                        
                                                   
           
Gross
                                 
   
Gross
 
Amounts
         
Gross Amounts not Offset
         
   
Amounts of
 
Offset on the
 
Net
 
in the Balance Sheet
         
   
Recognized
 
Balance
 
Liability
 
Financial
 
Collateral
         
   
Liabilities
 
Sheet
 
Balance
 
Instruments
 
Pledged
 
Net Amount
 
                                                   
Repurchase agreements / reverse repurchase agreements
    $ 375,000     $ (375,000 )   $     $     $     $  
Derivatives
      36,545             36,545       (1,962 )     (35,245 )      
Total
    $ 411,545     $ (375,000 )   $ 36,545     $ (1,962 )   $ (35,245 )   $  
Weighted average interest rate of repurchase agreements
      .27 %                                        
                                                   
           
Gross
                                 
   
Gross
 
Amounts
         
Gross Amounts not Offset
         
   
Amounts of
 
Offset on the
         
in the Balance Sheet
         
   
Recognized
 
Balance
 
Net Asset
 
Financial
 
Collateral
         
December 31, 2013
 
Assets
 
Sheet
 
Balance
 
Instruments
 
Received
 
Net Amount
 
                                                   
Repurchase agreements / reverse repurchase agreements
    $ 385,000     $ (350,000 )   $ 35,000     $     $ (38,982 )   $  
Derivatives
      23,833             23,833       (4,378 )     (2,912 )     16,543  
Total
    $ 408,833     $ (350,000 )   $ 58,833     $ (4,378 )   $ (41,894 )   $ 16,543  
Weighted average interest rate of reverse repurchase agreements
      1.09 %                                        
                                                   
           
Gross