United Community Banks, Inc.
UNITED COMMUNITY BANKS INC (Form: 10-Q, Received: 05/11/2015 06:14:58)



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, 2015
 
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 50,246,315 shares voting and 10,080,787 shares non-voting outstanding as of April 30, 2015.
 
 
 

 

 
INDEX
     
   
     
  Item 1.
Financial Statements.
   
     
     
3
     
     
4
         
     
5
     
     
6
     
     
7
     
     
8
     
  Item 2.  
36
     
  Item 3.  
56
     
  Item 4.  
56
     
     
   
     
  Item 1.  
57
  Item 1A.  
57
  Item 2.  
57
  Item 3.  
57
  Item 4.  
57
  Item 5.  
57
  Item 6.  
58
 
2
 

 

 
Part I – Financial Information

UNITED COMMUNITY BANKS, INC.
           
Consolidated Statement of Income (Unaudited)
 
             
   
Three Months Ended
 
   
March 31,
 
(in thousands, except per share data)
 
2015
   
2014
 
Interest revenue:
           
Loans, including fees
  $ 49,664     $ 47,688  
Investment securities, including tax exempt of $158 and $188
    12,058       11,607  
Deposits in banks and short-term investments
    812       843  
Total interest revenue
    62,534       60,138  
                 
Interest expense:
               
Deposits:
               
NOW
    394       440  
Money market
    673       563  
Savings
    20       20  
Time
    1,109       1,771  
Total deposit interest expense
    2,196       2,794  
Short-term borrowings
    98       840  
Federal Home Loan Bank advances
    392       58  
Long-term debt
    2,606       2,634  
Total interest expense
    5,292       6,326  
Net interest revenue
    57,242       53,812  
Provision for credit losses
    1,800       2,500  
Net interest revenue after provision for credit losses
    55,442       51,312  
                 
Fee revenue:
               
Service charges and fees
    7,615       7,898  
Mortgage loan and other related fees
    2,755       1,354  
Brokerage fees
    1,551       1,177  
Gains from sales of SBA loans
    1,141       -  
Securities gains, net
    1,539       217  
Loss from prepayment of debt
    (1,038 )     -  
Other
    2,119       1,530  
Total fee revenue
    15,682       12,176  
Total revenue
    71,124       63,488  
                 
Operating expenses:
               
Salaries and employee benefits
    26,446       24,396  
Communications and equipment
    3,271       3,239  
Occupancy
    3,278       3,378  
Advertising and public relations
    750       626  
Postage, printing and supplies
    938       776  
Professional fees
    1,919       1,427  
FDIC assessments and other regulatory charges
    1,209       1,353  
Other
    5,250       3,855  
Total operating expenses
    43,061       39,050  
Net income before income taxes
    28,063       24,438  
Income tax expense
    10,393       9,038  
Net income
    17,670       15,400  
Preferred stock dividends and discount accretion
    -       439  
Net income available to common shareholders
  $ 17,670     $ 14,961  
                 
Earnings per common share:
               
Basic
  $ .29     $ .25  
Diluted
    .29       .25  
Weighted average common shares outstanding:
               
Basic
    60,905       60,059  
Diluted
    60,909       60,061  
 
See accompanying notes to consolidated financial statements.
 
3
 

 

 
UNITED COMMUNITY BANKS, INC.
                                   
Consolidated Statement of Comprehensive Income (Unaudited)
 
                                     
   
Three Months Ended
 
   
March 31,
 
(in thousands)
 
2015
   
2014
 
                                     
   
Before-tax
Amount
   
Tax
(Expense)
Benefit
   
Net of Tax
Amount
   
Before-tax
Amount
   
Tax
(Expense)
Benefit
   
Net of Tax
Amount
 
                                     
Net income
  $ 28,063     $ (10,393 )   $ 17,670     $ 24,438     $ (9,038 )   $ 15,400  
Other comprehensive income:
                                               
Unrealized gains on available-for-sale securities:
                                               
Unrealized holding gains arising during period
    13,989       (5,305 )     8,684       3,869       (1,441 )     2,428  
Reclassification adjustment for gains included in net income
    (1,539 )     598       (941 )     (217 )     92       (125 )
Net unrealized gains
    12,450       (4,707 )     7,743       3,652       (1,349 )     2,303  
Amortization of losses included in net income on  available-for-sale securities transferred to held-to- maturity
    484       (182 )     302       330       (123 )     207  
Net unrealized gains
    484       (182 )     302       330       (123 )     207  
Amortization of losses included in net income on terminated derivative financial instruments that  were previously accounted for as cash flow hedges
    425       (165 )     260       97       (38 )     59  
Unrealized losses on derivative financial instruments accounted for as cash flow hedges
    (471 )     183       (288 )     (2,832 )     1,102       (1,730 )
Net unrealized losses
    (46 )     18       (28 )     (2,735 )     1,064       (1,671 )
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
    159       (62 )     97       91       (35 )     56  
Net defined benefit pension plan activity
    159       (62 )     97       387       (150 )     237  
                                                 
Total other comprehensive income
    13,047       (4,933 )     8,114       1,634       (558 )     1,076  
                                                 
Comprehensive income
  $ 41,110     $ (15,326 )   $ 25,784     $ 26,072     $ (9,596 )   $ 16,476  
 
See accompanying notes to consolidated financial statements.
 
4
 

 

 
UNITED COMMUNITY BANKS, INC.
                 
Consolidated Balance Sheet (Unaudited)
 
                   
   
March 31,
   
December 31,
   
March 31,
 
(in thousands, except share and per share data)
 
2015
   
2014
   
2014
 
ASSETS
                 
Cash and due from banks
  $ 77,493     $ 77,180     $ 52,813  
Interest-bearing deposits in banks
    82,269       89,074       110,529  
Short-term investments
    25,902       26,401       49,999  
Cash and cash equivalents
    185,664       192,655       213,341  
Securities available for sale
    1,801,973       1,782,734       1,837,676  
Securities held to maturity (fair value $413,550, $425,233 and $473,136)
    399,228       415,267       464,697  
Mortgage loans held for sale
    15,723       13,737       10,933  
Loans, net of unearned income
    4,787,689       4,672,119       4,355,708  
Less allowance for loan losses
    (70,007 )     (71,619 )     (75,223 )
Loans, net
    4,717,682       4,600,500       4,280,485  
Assets covered by loss sharing agreements with the FDIC
    -       3,315       21,353  
Premises and equipment, net
    159,036       159,390       161,540  
Bank owned life insurance
    81,490       81,294       80,790  
Accrued interest receivable
    20,154       20,103       18,572  
Net deferred tax asset
    201,898       215,503       243,683  
Derivative financial instruments
    20,291       20,599       21,563  
Other assets
    60,764       61,889       43,604  
Total assets
  $ 7,663,903     $ 7,566,986     $ 7,398,237  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                       
Liabilities:
                       
Deposits:
                       
       Demand
  $ 1,694,755     $ 1,574,317     $ 1,471,781  
       NOW
    1,420,956       1,504,887       1,392,863  
       Money market
    1,306,421       1,273,283       1,235,429  
       Savings
    312,013       292,308       270,910  
       Time:
                       
            Less than $100,000
    723,323       748,478       833,188  
            Greater than $100,000
    482,955       508,228       572,889  
Brokered
    497,508       425,011       470,481  
                     Total deposits
    6,437,931       6,326,512       6,247,541  
Repurchase agreements
    -       6,000       123,075  
Federal Home Loan Bank advances
    270,125       270,125       50,125  
Long-term debt
    113,901       129,865       129,865  
Derivative financial instruments
    29,276       31,997       42,309  
Unsettled securities purchases
    -       5,425       63,999  
Accrued expenses and other liabilities
    48,965       57,485       37,593  
Total liabilities
    6,900,198       6,827,409       6,694,507  
Shareholders’ equity:
                       
    Common stock, $1 par value; 100,000,000 shares authorized;
                       
50,228,075, 50,178,605 and 50,011,094 shares issued and outstanding
    50,228       50,178       50,011  
    Common stock, non-voting, $1 par value; 26,000,000 shares authorized;
                       
10,080,787, 10,080,787 and 10,080,787 shares issued and outstanding
    10,081       10,081       10,081  
    Common stock issuable; 400,369, 357,983 and 237,763 shares
    5,895       5,168       3,840  
    Capital surplus
    1,081,110       1,080,508       1,091,696  
    Accumulated deficit
    (372,933 )     (387,568 )     (433,130 )
    Accumulated other comprehensive loss
    (10,676 )     (18,790 )     (18,768 )
        Total shareholders’ equity
    763,705       739,577       703,730  
        Total liabilities and shareholders’ equity
  $ 7,663,903     $ 7,566,986     $ 7,398,237  
 
See accompanying notes to consolidated financial statements.
 
5
 

 

 
UNITED COMMUNITY BANKS, INC.
 
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
 
For the Three Months Ended March 31,
 
                                                       
                                             
Accumulated
       
   
Preferred Stock
         
Non-Voting
   
Common
               
Other
       
(in thousands, except share
and per share data)
 
Series
   
Series
   
Common
   
Common
   
Stock
   
Capital
   
Accumulated
   
Comprehensive
       
    B       D    
Stock
   
Stock
   
Issuable
   
Surplus
   
Deficit
   
Loss
   
Total
  
                                                                         
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
                                                    15,400               15,400  
Other comprehensive income
                                                            1,076       1,076  
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 )
Common stock issued at market (640,000 shares)
                    640                       11,566                       12,206  
Common stock issued to dividend reinvestment plan and employee benefit plans (11,837 shares)
                    12                       197                       209  
Conversion of non-voting common stock to voting (3,107,419 shares)
                    3,107       (3,107 )                                     -  
Amortization of stock option and restricted stock awards
                                            1,120                       1,120  
Vesting of restricted stock, net of shares surrendered to cover payroll taxes (1,096 shares issued, 0 shares deferred)
                    1                       (2 )                     (1 )
Deferred compensation plan, net, including dividend equivalents
                                    57                               57  
Shares issued from deferred compensation plan (7,397 shares)
                    8               (147 )     139                       -  
Preferred stock dividends:
                                                                       
Series B
                                                    (159 )             (159 )
Series D
                                                    (280 )             (280 )
Balance, March 31, 2014
  $ -     $ -     $ 50,011     $ 10,081     $ 3,840     $ 1,091,696     $ (433,130 )   $ (18,768 )   $ 703,730  
                                                                         
Balance, December 31, 2014
  $ -     $ -     $ 50,178     $ 10,081     $ 5,168     $ 1,080,508     $ (387,568 )   $ (18,790 )   $ 739,577  
Net income
                                                    17,670               17,670  
Other comprehensive income
                                                            8,114       8,114  
Common stock issued to dividend reinvestment plan and employee benefit plans (3,689 shares)
                    4                       57                       61  
Amortization of stock option and restricted stock awards
                                            991                       991  
Vesting of restricted stock, net of shares surrendered to cover payroll taxes (31,718 shares issued, 51,326 shares deferred)
                    32               759       (1,129 )                     (338 )
Deferred compensation plan, net, including dividend equivalents
                                    106                               106  
Shares issued from deferred compensation plan (14,063 shares)
                    14               (138 )     124                       -  
Common stock dividends ($.05 per share)
                                                    (3,035 )             (3,035 )
Tax on restricted stock vesting  
                                            559                       559  
Balance, March 31, 2015
  $ -     $ -     $ 50,228     $ 10,081     $ 5,895     $ 1,081,110     $ (372,933 )   $ (10,676 )   $ 763,705  
 
See accompanying notes to consolidated financial statements.
 
6
 

 


UNITED COMMUNITY BANKS, INC.
           
Consolidated Statement of Cash Flows (Unaudited)
 
             
   
Three Months Ended
 
   
March 31,
 
(in thousands)
 
2015
   
2014
 
Operating activities:
           
Net income
  $ 17,670     $ 15,400  
Adjustments to reconcile net loss to net cash  provided by operating activities:
               
Depreciation, amortization and accretion
    5,158       4,927  
Provision for credit losses
    1,800       2,500  
Stock based compensation
    991       1,120  
Deferred income tax benefit
    8,672       9,776  
Securities gains, net
    (1,539 )     (217 )
Net losses and write downs on sales of other real estate owned
    (81 )     (244 )
Loss on prepayment of borrowings
    1,038       -  
Changes in assets and liabilities:
               
Other assets and accrued interest receivable
    7,106       6,607  
Accrued expenses and other liabilities
    (11,342 )     (12,230 )
Mortgage loans held for sale
    (1,986 )     (614 )
Net cash provided by operating activities
    27,487       27,025  
                 
Investing activities:
               
Investment securities held to maturity:
               
Proceeds from maturities and calls of securities held to maturity:
    16,144       15,007  
Investment securities available for sale:
               
Proceeds from sales of securities available for sale
    69,467       153,316  
Proceeds from maturities and calls of securities available for sale
    55,121       56,757  
    Purchases of securities available for sale
    (137,305 )     (173,024 )
    Net increase in loans
    (122,257 )     (34,027 )
    Funds (paid to) collected from FDIC under loss sharing agreements
    (1,198 )     1,623  
    Proceeds from sales of premises and equipment
    -       509  
    Purchases of premises and equipment
    (1,768 )     (618 )
    Proceeds from sale of other real estate
    1,408       2,417  
Net cash (used in) provided by investing activities
    (120,388 )     21,960  
                 
Financing activities:
               
    Net change in deposits
    111,419       46,036  
    Net change in short-term borrowings
    (6,540 )     69,834  
    Repayments of trust preferred securitie
    (15,998 )     -  
    Proceeds from FHLB advances
    410,000       355,000  
    Repayments of FHLB advances
    (410,000 )     (425,000 )
    Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans
    61       209  
    Proceeds from issuance of common stock, net of issuance costs
    -       12,206  
    Retirement of preferred stock
    -       (121,613 )
    Cash dividends on common stock
    (3,032 )     -  
    Cash dividends on preferred stock
    -       (1,214 )
Net cash provided by (used in) financing activities
    85,910       (64,542 )
                 
Net change in cash and cash equivalents
    (6,991 )     (15,557 )
                 
    Cash and cash equivalents at beginning of period
    192,655       228,898  
                 
Cash and cash equivalents at end of period
  $ 185,664     $ 213,341  
                 
Supplemental disclosures of cash flow information:
               
      Cash paid during the period for:
               
         Interest
  $ 6,334     $ 7,449  
         Income taxes
    1,800       1,321  
      Unsettled securities purchases
    -       34,437  
      Unsettled SBA loan Sales     3,671       -  
      Transfers of loans to foreclosed properties
    459       4,367  
 
See accompanying notes to consolidated financial statements.
 
7
 

 

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 its Annual Report on Form 10-K for the year ended December 31, 2014.
 
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.
 
Certain 2014 amounts have been reclassified to conform to the 2015 presentation.
 
Note 2 –Accounting Standards Updates and Recently Adopted Standards
 
In February 2015, the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis , effective for fiscal years beginning after December 15, 2015 and interim periods within those years and early adoption is permitted. The new standard is intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The amendments in the ASU affect the consolidation evaluation for reporting organizations. In addition, the amendments in this ASU simplify and improve current GAAP by reducing the number of consolidation models. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs . To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability consistent with debt discounts.  The standard will be effective for the United’s fiscal year beginning after December 15, 2015 and subsequent interim periods. The adoption of ASU 2015-03 is not expected to have a material effect on the United’s consolidated financial statements.
 
Note 3 – Acquisition
 
On June 26, 2014, United completed the acquisition of substantially all of the assets of Business Carolina, Inc., a specialty Small Business Administration (“SBA”) / United States Department of Agriculture (“USDA”) lender headquartered in Columbia, South Carolina.  On the closing date, United paid $31.3 million in cash for loans having a fair value on the purchase date of $24.8 million, accrued interest of $83,000, servicing rights with a fair value on the purchase date of $2.13 million, premises and equipment with a fair value on the purchase date of $2.60 million and goodwill in the amount of $1.51 million representing the premium paid over the fair value of the separately identifiable assets and liabilities acquired.  The gross contractual amount of loans receivable was $28.0 million as of the acquisition date.  United has not identified any material separately identifiable intangible assets resulting from the acquisition.
 
The loans and servicing assets that were acquired in this transaction were valued by a third party vendor that specializes in the valuations of these SBA related assets.  These assets are very illiquid and United does not have the same level of visibility into the inputs that the valuation vendor has.  Therefore, United considers those inputs to be level 3 in the Accounting Standards Codification (“ASC”) 820 hierarchy.  For the loans, the valuations were derived by estimating the expected cash flows using a combination of prepayment speed and default estimates.  The cash flows are then discounted using the rates implied by observed transactions in the market place.
 
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.
 
8
 

 

 
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
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 March 31, 2015, December 31, 2014 and March 31, 2014 (in thousands) .
                                     
      Gross
Amounts of Recognized
Assets
      Gross
Amounts
Offset on the
Balance
Sheet
      Net Asset
Balance
   
 
Gross Amounts not Offset
in the Balance Sheet
       
March 31, 2015
             
Financial Instruments
   
Collateral
Received
   
Net Amount
 
                                     
Repurchase agreements / reverse repurchase agreements
  $ 345,000     $ (325,000 )   $ 20,000     $ -     $ (21,048 )   $ -  
Derivatives
    20,291       -       20,291       (597 )     (4,435 )     15,259  
Total
  $ 365,291     $ (325,000 )   $ 40,291     $ (597 )   $ (25,483 )   $ 15,259  
Weighted average interest rate of reverse repurchase agreements
    1.18 %                                        
                                                 
      Gross
Amounts of
Recognized
Liabilities
      Gross
Amounts
Offset on the
Balance
Sheet
      Net
Liability
Balance
   
 
Gross Amounts not Offset
in the Balance Sheet
       
               
Financial
Instruments
   
Collateral
Pledged
   
Net Amount
 
                                                 
Repurchase agreements / reverse repurchase agreements
  $ 325,000     $ (325,000 )   $ -     $ -     $ -     $ -  
Derivatives
    29,276       -       29,276       (597 )     (31,407 )     -  
Total
  $ 354,276     $ (325,000 )   $ 29,276     $ (597 )   $ (31,407 )   $ -  
Weighted average interest rate of repurchase agreements
    .30 %                                        
                                     
      Gross
Amounts of
Recognized
Assets
      Gross
Amounts
Offset on the
Balance
Sheet
      Net Asset
Balance
   
 
Gross Amounts not Offset
in the Balance Sheet
       
December 31, 2014
             
Financial
Instruments
   
Collateral
Received
   
Net Amount
 
                                     
Repurchase agreements / reverse repurchase agreements
  $ 395,000     $ (375,000 )   $ 20,000     $ -     $ (20,302 )   $ -  
Derivatives
    20,599       -       20,599       (869 )     (3,716 )     16,014  
Total
  $ 415,599     $ (375,000 )   $ 40,599     $ (869 )   $ (24,018 )   $ 16,014  
Weighted average interest rate of reverse repurchase agreements
    1.16 %                                        
                                                 
      Gross
Amounts of
Recognized
Liabilities
      Gross
Amounts
Offset on the
Balance
Sheet
      Net
Liability
Balance
   
 
Gross Amounts not Offset
in the Balance Sheet
       
               
Financial
Instruments
   
Collateral
Pledged
      Net Amount  
                                                 
Repurchase agreements / reverse repurchase agreements
  $ 375,000     $ (375,000 )   $ -     $ -     $ -     $ -  
Derivatives
    31,997       -       31,997       (869 )     (32,792 )     -  
Total
  $ 406,997     $ (375,000 )   $ 31,997     $ (869 )   $ (32,792 )   $ -  
Weighted average interest rate of repurchase agreements
    .29 %                                        
                                     
    Gross
Amounts of
Recognized
Assets
    Gross
Amounts
Offset on the
Balance
Sheet
    Net Asset
Balance
   
 
Gross Amounts not Offset
in the Balance Sheet
       
March 31, 2014
             
Financial
Instruments
   
Collateral
Received
      Net Amount  
                                     
Repurchase agreements / reverse repurchase agreements
  $ 397,000     $ (350,000 )   $ 47,000     $ -     $ (51,243 )   $ -  
Derivatives
    21,563       -       21,563       (3,896 )     (704 )     16,963  
      Total
  $ 418,563     $ (350,000 )   $ 68,563     $ (3,896 )   $ (51,947 )   $ 16,963  
Weighted average interest rate of reverse repurchase agreements
    1.09 %                                        
                                                 
      Gross
Amounts of
Recognized
Liabilities
      Gross
Amounts
Offset on the
Balance
Sheet
      Net
Liability
Balance
   
 
Gross Amounts not Offset
in the Balance Sheet
       
               
Financial
Instruments
   
Collateral
Pledged
      Net Amount  
                                                 
Repurchase agreements / reverse repurchase agreements
  $ 350,000     $ (350,000 )   $ -     $ -     $ -     $ -  
Derivatives
    42,309       -       42,309       (3,896 )     (35,754 )     2,659  
      Total
  $ 392,309     $ (350,000 )   $ 42,309     $ (3,896 )   $ (35,754 )   $ 2,659  
Weighted average interest rate of repurchase agreements
    .28 %                                        
 
9
 

 

 
UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
 
Note 5 – Securities
 
The amortized cost basis, gross unrealized gains and losses and fair value of securities held-to-maturity at March 31, 2015, December 31, 2014 and March 31, 2014 are as follows (in thousands) .
 
         
Gross
   
Gross
       
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
As of March 31, 2015
 
Cost
   
Gains
   
Losses
   
Value
 
State and political subdivisions
  $ 48,136     $ 4,029     $ -     $ 52,165  
Mortgage-backed securities   (1)
    351,092       10,470       177       361,385  
                                 
Total
  $ 399,228     $ 14,499     $ 177     $ 413,550  
                                 
As of December 31, 2014
                               
State and political subdivisions
  $ 48,157     $ 3,504     $ -     $ 51,661  
Mortgage-backed securities   (1)
    367,110       7,716       1,254       373,572  
                                 
Total
  $ 415,267     $ 11,220     $ 1,254     $ 425,233  
                                 
As of March 31, 2014
                               
State and political subdivisions
  $ 51,257     $ 3,430     $ 13     $ 54,674  
Mortgage-backed securities   (1)
    413,440       6,877       1,855       418,462  
                                 
Total
  $ 464,697     $ 10,307     $ 1,868     $ 473,136  
 
(1)  All are residential type mortgage-backed securities and U.S.government agency commercial mortgage backed securities.
 
The following table summarizes held-to-maturity securities in an unrealized loss position as of March 31, 2015, December 31, 2014 and March 31, 2014 ( in thousands) .
 
   
Less than 12 Months
   
12 Months or More
   
Total
 
As of March 31, 2015
 
Fair Value
   
Unrealized
Loss
   
Fair Value
   
Unrealized
Loss
   
Fair Value
   
Unrealized
Loss
 
Mortgage-backed securities
  $ 16,177     $ 140     $ 6,252     $ 37     $ 22,429     $ 177  
Total unrealized loss position
  $ 16,177     $ 140     $ 6,252     $ 37     $ 22,429     $ 177  
                                                 
As of December 31, 2014
                                               
Mortgage-backed securities
  $ 126,514     $ 917     $ 17,053     $ 337     $ 143,567     $ 1,254  
Total unrealized loss position
  $ 126,514     $ 917     $ 17,053     $ 337     $ 143,567     $ 1,254  
                                                 
As of March 31, 2014
                                               
State and political subdivisions
  $ 1,628     $ 13     $ -     $ -     $ 1,628     $ 13  
Mortgage-backed securities
    200,284       1,721       1,644       134       201,928       1,855  
Total unrealized loss position
  $ 201,912     $ 1,734     $ 1,644     $ 134     $ 203,556     $ 1,868  
 
Management evaluates securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, among other factors.  In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports.  No impairment charges were recognized during the three months ended March 31, 2015 or 2014.
 
10
 

 

 
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, 2015, December 31, 2014 and March 31, 2014 are presented below (in thousands) .
 
         
Gross
   
Gross
       
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
As of March 31, 2015
 
Cost
   
Gains
   
Losses
   
Value
 
        U.S. Treasuries
  $ 47,661     $ 753     $ -     $ 48,414  
        U.S. Government agencies