Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Changes And Error Corrections [Abstract]

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force). ASU 2014-04 clarifies when an “in substance repossession or foreclosure” occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, such that all or a portion of the loan should be derecognized and the real estate property recognized. ASU 2014-04 states that a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, (i) upon either the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure, or (ii) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amendments of ASU 2014-04 also require interim and annual disclosure of both the amount of foreclosed residential real estate property held by the creditor and the recorded investment in consumer mortgage loans collateralized by residential real estate properties that are in the process of foreclosure. The amendments of ASU 2014-04 are effective for interim and annual periods beginning after December 15, 2014, and may be applied using either a modified retrospective transition method or a prospective transition method as described in ASU 2014-04. The adoption of ASU 2014-04 is not expected to have a significant impact on the Company’s consolidated financial position, results of operations or cash flows.

In January 2014, the FASB issued ASU 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects (a consensus of the FASB Emerging Issues Task Force). ASU 2014-01 permits reporting entities that invest in qualified affordable housing projects to elect to account for those investments using the “proportional amortization method” if certain conditions are met. Under this method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The decision to apply the proportional amortization method of accounting is an accounting policy decision and should be applied consistently to all qualifying affordable housing project investments. ASU 2014-01 should be applied retrospectively to all periods presented and is effective for annual and interim reporting periods beginning after December 15, 2014. The Company does not have a significant amount of investments in qualified affordable housing projects that qualify for the low income housing tax credit. Such investments are currently either consolidated in the Company’s financial statements or accounted for as cost method investments. The adoption of ASU 2014-01 is not expected to have a significant impact on the Company’s consolidated financial position, results of operations or cash flows.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). ASU 2013-11 provides that an entity’s unrecognized tax benefit, or a portion of its unrecognized tax benefit, should be presented in its financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with one exception. The exception states that to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position, or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 applies prospectively for all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or tax credit carryforward exists at the reporting date. ASU 2013-11 is effective for fiscal years, and interim periods within those years beginning after December 15, 2013. The Company adopted ASU 2013-11 on January 1, 2014. The adoption of ASU 2013-11 did not have a significant impact on the Company’s consolidated financial position, results of operations or cash flows.

Consolidation

The Company has determined that these structures require evaluation as a variable interest entity (“VIE”) under ASC Topic 810,Consolidation. The Company consolidates one of the funds in which it has a 99.9% limited partnership interest. Assets recorded by the Company as a result of the consolidation totaled approximately $53,000 as of both June 30, 2014 and December 31, 2013, respectively

Accounting for Tax Benefits Resulting from Investments in Affordable Housing Projects

The remaining limited partnership investments are unconsolidated and are accounted for under the cost method as allowed under ASC Topic 325, Accounting for Tax Benefits Resulting from Investments in Affordable Housing Projects. The Company amortizes the excess of carrying value of the investment over its estimated residual value during the period in which tax credits are allocated to the investors.

Segment Reporting

Under ASC Topic 280, Segment Reporting, certain information is disclosed for the two reportable operating segments of the Company. The reportable segments were determined using the internal management reporting system. These segments are composed of USBI’s and the Bank’s significant subsidiaries. The accounting policies for each segment are the same as those described in Note 2, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in USBI’s Annual Report on Form 10-K for the period ended December 31, 2013. The segment results include certain overhead allocations and intercompany transactions that were recorded at current market prices. All intercompany transactions have been eliminated to determine the consolidated balances. The results for the two reportable segments of the Company are included in the following table:


	FUSB			ALC		All Other		Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended June 30, 2014
Net interest income	$	4,101		$	3,197	$	2	$	—		$	7,300
Provision (reduction in reserve) for loan losses		(325	)		61		—		—			(264	)
Total non-interest income		1,286			286		1,425		(1,512	)		1,485
Total non-interest expense		4,767			2,443		193		(180	)		7,223

Income before income taxes		945			979		1,234		(1,332	)		1,826
Provision for income taxes		230			377		1		—			608

Net income	$	715		$	602	$	1,233	$	(1,332	)	$	1,218

Other significant items:
Total assets	$	572,377		$	71,303	$	79,408	$	(152,396	)	$	570,692
Total investment securities		209,865			—		80		—			209,945
Total loans, net		262,533			68,488		—		(58,935	)		272,086
Investment in subsidiaries		5			—		74,262		(74,262	)		5
Fixed asset addition		159			1		—		—			160
Depreciation expense		131			53		—		—			184
Total interest income from external customers		3,935			3,995		—		—			7,930
Total interest income from affiliates		799			—		2		(801	)		—

For the six months ended June 30, 2014:
Net interest income	$	8,188		$	6,308	$	5	$	—		$	14,501
Provision (reduction in reserve) for loan losses		(500	)		650		—		—			150
Total non-interest income		2,217			572		2,468		(2,625	)		2,632
Total non-interest expense		9,097			4,999		402		(391	)		14,107

Income before income taxes		1,808			1,231		2,071		(2,234	)		2,876
Provision for income taxes		406			476		2		—			884

Net income	$	1,402		$	755	$	2,069	$	(2,234	)	$	1,992

Other significant items:
Fixed asset addition	$	867		$	14	$	—	$	—		$	881
Depreciation expense		259			105		—		—			364
Total interest income from external customers		7,904			7,872		—		—			15,776
Total interest income from affiliates		1,564			—		4		(1,568	)		—


	FUSB			ALC		All Other		Eliminations			Consolidated
	(Dollars in Thousands)
For the three months ended June 30, 2013
Net interest income	$	4,181		$	3,511	$	3	$	—		$	7,695
Provision (reduction in reserve) for loan losses		(200	)		253		—		—			53
Total non-interest income		929			349		1,437		(1,487	)		1,228
Total non-interest expense		4,666			2,529		199		(218	)		7,176

Income before income taxes		644			1,078		1,241		(1,269	)		1,694
Provision for income taxes		96			415		1		—			512

Net income	$	548		$	663	$	1,240	$	(1,269	)	$	1,182

Other significant items:
Total assets	$	557,364		$	71,769	$	75,355	$	(148,782	)	$	555,706
Total investment securities		137,646			—		80		—			137,726
Total loans, net		299,497			68,424		—		(55,913	)		312,008
Investment in subsidiaries		784			—		70,136		(70,915	)		5
Fixed asset addition		33			7		—		—			40
Depreciation expense		137			38		—		—			175
Total interest income from external customers		4,123			4,309		—		—			8,432
Total interest income from affiliates		798			—		3		(801	)		—

For the six months ended June 30, 2013:
Net interest income	$	8,516		$	6,979	$	5	$	—		$	15,500
Provision (reduction in reserve) for loan losses		(162	)		721		—		—			559
Total non-interest income		2,326			685		2,511		(2,671	)		2,851
Total non-interest expense		9,285			5,661		361		(439	)		14,868

Income before income taxes		1,719			1,282		2,155		(2,232	)		2,924
Provision for income taxes		358			496		2		—			856

Net income	$	1,361		$	786	$	2,153	$	(2,232	)	$	2,068

Other significant items:
Fixed asset addition	$	63		$	17	$	—	$	—		$	80
Depreciation expense		261			79		—		—			340
Total interest income from external customers		8,398			8,628		—		—			17,026
Total interest income from affiliates		1,649			—		4		(1,653	)		—

- Definition

Disclosure of accounting policy for consolidation to describe the significant judgments and assumptions made in determining whether a variable interest held by the entity requires the variable interest entity to be consolidated and (or) disclose information about its involvement with the variable interest entity; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; and the significant factors considered and judgments made in determining that the power to direct the activities that significantly impact the economic performance of the variable interest entity are shared (as defined).

+ References+ Details