SEC Filing | United Community Banks, Inc.

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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

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


PART I - Financial Information

	Item 1.	Financial Statements.

		Consolidated Statement of Income (unaudited) for the Three Months Ended March 31, 2015 and 2014	3

		Consolidated Statement of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2015 and 2014	4

		Consolidated Balance Sheet (unaudited) at March 31, 2015, December 31, 2014 and March 31, 2014	5

		Consolidated Statement of Changes in Shareholders’ Equity (unaudited) for the Three Months Ended March 31, 2015 and 2014	6

		Consolidated Statement of Cash Flows (unaudited) for the Three Months Ended March 31, 2015 and 2014	7

		Notes to Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	36

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	56

	Item 4.	Controls and Procedures.	56


PART II - Other Information

	Item 1.	Legal Proceedings.	57
	Item 1A.	Risk Factors.	57
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	57
	Item 3.	Defaults Upon Senior Securities.	57
	Item 4.	Mine Safety Disclosures.	57
	Item 5.	Other Information.	57
	Item 6.	Exhibits.	58

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.

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.

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.

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
(in thousands, except share and per share data)		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.

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.

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.

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	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		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
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		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	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		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
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		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	Gross Amounts of Recognized Assets			Gross Amounts Offset on the Balance Sheet			Net Asset Balance		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
	Gross Amounts of Recognized Liabilities			Gross Amounts Offset on the Balance Sheet			Net Liability Balance		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	%

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.

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		36,508		760		-		37,268
State and political subdivisions		15,864		491		3		16,352
Mortgage-backed securities (1)		1,023,809		20,986		3,681		1,041,114
Corporate bonds		186,126		2,107		526		187,707
Asset-backed securities		466,663		2,812		747		468,728
Other		2,390		-		-		2,390

Total	$	1,779,021	$	27,909	$	4,957	$	1,801,973

As of December 31, 2014
U.S. Treasuries	$	105,540	$