10q10k10q10k.net

What changed in UNITED COMMUNITY BANKS INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of UNITED COMMUNITY BANKS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+413 added−398 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-23)

Top changes in UNITED COMMUNITY BANKS INC's 2024 10-K

413 paragraphs added · 398 removed · 287 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

64 edited+18 added−14 removed139 unchanged
Biggest changeVolcker Rule The Volcker rule (1) generally prohibits banks from engaging in proprietary trading, which is engaging as principal (for the bank’s own account) in any purchase or sale of one or more of certain types of financial instruments, and (2) limits banks’ ability to invest in or sponsor hedge funds or private equity funds. 16 CFPB The Dodd-Frank Act created the CFPB, which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, the Consumer Financial Privacy provisions of the GLB Act and certain other statutes.
Biggest changeThese laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedure Act and their respective state law counterparts. 16 Volcker Rule The Volcker rule (1) generally prohibits banks from engaging in proprietary trading, which is engaging as principal (for the bank’s own account) in any purchase or sale of one or more of certain types of financial instruments, and (2) limits banks’ ability to invest in or sponsor hedge funds or private equity funds.
The most significant categories of our loans are those to finance owner occupied real estate, commercial income property, commercial and industrial equipment and operating loans, and consumer loans secured by personal residences. A majority of our loans are made on a secured basis.
The most significant categories of our loans are those to finance owner occupied commercial real estate, commercial income property, commercial and industrial equipment and operating loans, and consumer loans secured by personal residences. A majority of our loans are made on a secured basis.
A steeper yield curve, one with long-term interest rates noticeably higher than short-term rates, is generally positive for our net interest margin as lower short rates will keep our deposit costs down while higher long rates will support the rates we can charge on lending.
A steeper yield curve, one with long-term interest rates noticeably higher than short-term rates, is generally positive for our net interest margin as lower short-term rates will keep our deposit costs down while higher long-term rates will support the rates we can charge on lending.
But if short-term rates are expected to fall, that expectation may be reflected in the longer-term rates resulting in a flattened or inverted yield curve, causing our margins to suffer. Moreover, the Federal Reserve tends to lower rates in response to, or to avoid, a weakening economy.
But if short-term rates are expected to fall, that expectation may be reflected in the longer-term rates resulting in a flattened or inverted yield curve, causing our margins to suffer. Moreover, the Federal Reserve tends to lower short-term rates in response to, or to avoid, a weakening economy.
We originate a significant portion of our SBA/USDA and equipment finance loans on a national basis, to customers outside of our immediate market areas. Our full-service retail mortgage lending division, UCMS, is approved as a seller/servicer for the Fannie Mae and the Freddie Mac and provides fixed and adjustable-rate home mortgages.
We originate a significant portion of our SBA/USDA and equipment finance loans on a national basis, to customers outside of our immediate market areas. Our full-service retail mortgage lending division, UCMS, is approved as a seller/servicer for Fannie Mae and Freddie Mac and provides fixed and adjustable-rate home mortgages.
Incentive Compensation and Risk Management In addition to the potential restrictions on discretionary bonus compensation under the Basel III rules, the federal bank regulatory agencies have issued guidance on incentive compensation policies (the “Incentive Compensation Guidance”) intended to ensure that the incentive compensation policies of financial institutions do not undermine the safety and soundness of such institutions by encouraging excessive risk-taking.
Incentive Compensation and Risk Management In addition to the potential restrictions on discretionary bonus compensation under the Basel III rules, the federal bank regulatory agencies have issued guidance on incentive compensation policies (the “Incentive Compensation Guidance”) intended to ensure that 17 the incentive compensation policies of financial institutions do not undermine the safety and soundness of such institutions by encouraging excessive risk-taking.
We are committed to attracting and retaining talented employees whose values align with our customer service mission, creating meaningful opportunities for training and advancement, and being an extraordinary place to work. Diversity and Inclusion We strive to foster an open, supportive workplace in which our employees can grow professionally and achieve their potential.
We are committed to attracting and retaining talented employees whose values align with our customer service mission, creating meaningful opportunities for training and advancement, and being an extraordinary place to work. Diversity and Inclusion We strive to foster an open, supportive workplace in which our employees can grow professionally and achieve their full potential.
The Bank is subject to these restrictions, which include quantitative and qualitative limits on the amounts and types of permissible transactions, including 14 extensions of credit to affiliates, investments in the stock or securities of affiliates, purchases of assets from affiliates and certain other transactions with affiliates.
The Bank is subject to these restrictions, which include quantitative and qualitative limits on the amounts and types of permissible transactions, including extensions of credit to affiliates, investments in the stock or securities of affiliates, purchases of assets from affiliates and certain other transactions with affiliates.
Risk-Based Ratios Category Total Capital Tier 1 Capital CET1 Capital Leverage Ratio Tangible Equity to Total Assets Well-capitalized at least 10% at least 8% at least 6.5% at least 5% Adequately capitalized at least 8% at least 6% at least 4.5% at least 4% Undercapitalized under 8% under 6% under 4.5% under 4% Significantly undercapitalized under 6% under 4% under 3% under 3% Critically undercapitalized 2% or less As of December 31, 2023, the Bank qualified as “well-capitalized” under the regulatory capital requirements discussed above.
Risk-Based Ratios Category Total Capital Tier 1 Capital CET1 Capital Leverage Ratio Tangible Equity to Total Assets Well-capitalized at least 10% at least 8% at least 6.5% at least 5% Adequately capitalized at least 8% at least 6% at least 4.5% at least 4% Undercapitalized under 8% under 6% under 4.5% under 4% Significantly undercapitalized under 6% under 4% under 3% under 3% Critically undercapitalized 2% or less As of December 31, 2024, the Bank qualified as “well-capitalized” under the regulatory capital requirements discussed above.
We offer a variety of group health plans for our employees, including prescription drug coverage, comprehensive dental and vision plans, disability and life insurance and health care accounts, which help our employees reduce the costs of medical and dependent care by allowing them to set aside pre-tax dollars.
We offer a variety of group health plans for our employees, including comprehensive medical, prescription drug coverage, dental and vision plans, disability and life insurance. We also offer health care savings accounts, which help our employees reduce the costs of medical and dependent care by allowing them to set aside pre-tax dollars.
Institutions in any of the three undercapitalized categories are prohibited from declaring dividends or making capital distributions. In addition, an institution that is categorized in the three undercapitalized categories is required to submit an acceptable capital restoration plan to its appropriate federal banking agency, which, for the Bank, is the FDIC.
Institutions in any of the three undercapitalized categories are prohibited from declaring dividends or making capital distributions. In addition, an institution that is categorized in the three undercapitalized categories is required to submit an acceptable capital restoration plan to its appropriate federal banking agency, which, for the Bank, is the Federal Reserve.
Our portfolio consists primarily of residential and commercial mortgage-backed securities, asset-backed securities, U.S. Treasury, U.S. agency and municipal obligations. Many of the securities are classified by us as AFS and recorded on our balance sheet at fair value at each balance sheet date.
Our portfolio consists primarily of residential and commercial mortgage-backed securities, asset-backed securities, U.S. Treasury, U.S. agency and municipal obligations. Securities classified by us as AFS are recorded on our balance sheet at fair value at each balance sheet date.
We provide payment processing services for our commercial and small business customers through UCPS. UCPS is a joint venture between the Bank and Clover, a merchant services provider and subsidiary of Fiserv, Inc. Other General Information Subsidiaries Our consolidated operating subsidiaries at December 31, 2023 are listed in Exhibit 21 of this Report.
We provide payment processing services for our commercial and small business customers through UCPS. UCPS is a joint venture between the Bank and Clover, a merchant services provider and subsidiary of Fiserv, Inc. Other General Information Subsidiaries Our consolidated operating subsidiaries at December 31, 2024 are listed in Exhibit 21 to this Report.
The majority of our loans are to customers located in the immediate market areas of our banking locations in Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama, including customers who have a seasonal residence in our market areas.
The preponderance of our loans are to customers located in the immediate market areas of our banking locations in Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama, including customers who have a seasonal residence in our market areas.
Generally, subject to a narrow exception, banking regulators must appoint a receiver or conservator for an institution that is “critically undercapitalized.” The FDIC regulations also allow it to “downgrade” an institution to a lower capital category based on supervisory factors other than capital.
Generally, subject to a narrow exception, banking regulators must appoint a receiver or conservator for an institution that is “critically undercapitalized.” The Federal Reserve regulations also allow it to “downgrade” an institution to a lower capital category based on supervisory factors other than capital.
Further, our references to website URLs are intended to be inactive textual references only.
Further, our references to website URLs are intended to be inactive textual references only. 21
Human Resources Management As of December 31, 2023 we had 3,121 full-time equivalent employees compared to 2,843 at December 31, 2022. None of our employees are represented by a union, collective bargaining agreement or similar arrangement, and we have not experienced any labor disputes or strikes arising from any organized labor groups.
Human Resources Management As of December 31, 2024, we had 2,979 full-time equivalent employees compared to 3,121 at December 31, 2023. None of our employees are represented by a union, collective bargaining agreement or similar arrangement, and we have not experienced any labor disputes or strikes arising from any organized labor groups.
Economic weakness tends to diminish client borrowing and other activities that otherwise benefit our performance. Further information on these topics is presented: within Item 1A, Risk Factors under the headings: Risks from Changes in Economic Conditions , Risks Associated with Monetary Events , Liquidity and Funding Risk , and Interest Rate and Yield Curve Risks.
Economic weakness tends to diminish client borrowing and other activities that otherwise benefit our performance. Further information on these topics is presented: within Item 1A, Risk Factors under the headings: Risks From Changes in Economic Conditions and Monetary Policy , Liquidity and Funding Risk , and Interest Rate and Yield Curve Risks.
New CFPB regulations, and changes to CFPB regulations and enforcement priorities, may have a material impact on our compliance costs, compliance risk, and operations of the Bank. FDIC Insurance Assessments; Deposit Insurance Fund The Bank’s deposits are insured by the FDIC up to $250,000 per depositor subject to applicable limitations through the Deposit Insurance Fund.
New CFPB regulations, and changes to CFPB regulations and enforcement priorities, may have a material impact on our compliance costs, compliance risk, and operations of the Bank. FDIC Insurance Assessments; Deposit Insurance Fund The FDIC insures the Bank’s deposits up to $250,000 per depositor subject to applicable limitations through the Deposit Insurance Fund.
Overview The Holding Company The Holding Company is a bank holding company and financial holding company within the meaning of the BHC Act and is registered with the Federal Reserve. We are subject to the regulation and supervision of, and to examination by, the Federal Reserve (under the BHC Act).
Overview The Holding Company The Holding Company is a bank holding company and “financial holding company” within the meaning of the BHC Act and is registered with the Federal Reserve. We are subject to the regulation and supervision of, and to examination by, the Federal Reserve (under the BHC Act).
The Bank United Community Bank, our most significant subsidiary, is a South Carolina state-chartered bank subject to the regulation and supervision of, and to examination by, t he SCBFI .
The Bank Our most significant subsidiary, United Community Bank, headquartered in Greenville, South Carolina , is a South Carolina state-chartered bank subject to the regulation and supervision of, and to examination by, t he SCBFI.
The Holding Company’s principal source of cash flow, including cash flow to pay dividends on our stock or to pay principal (including premium, if any) and interest on debt securities is dividends paid to it by the Bank.
The Holding Company’s principal source of cash flow, including cash flow to pay dividends on our stock or to pay principal and interest on debt securities, is dividends paid to it by the Bank.
We have entered new markets and expanded our product offerings both by establishing new branches and service locations and also by selective acquisitions of existing market participants. We have developed a number of commercial lending businesses organically, which provide local commercial real estate, middle market, senior living, renewable energy, builder finance and asset-based lending services.
We have entered new markets and expanded our product offerings both by establishing new branches and service locations and also by selective acquisitions of existing market participants. We have developed a number of commercial lending businesses organically, which provide local CRE, middle market, renewable energy, builder finance and asset-based lending services.
Employee Engagement Surveys The Best Banks to Work For program, initiated in 2013 by American Banker and Best Companies Group, identifies and recognizes U.S. banks for outstanding employee satisfaction. We are honored to have been named one of American Banker’s 2023 Best Banks to Work For, an award we’ve received for seven consecutive years.
Employee Engagement Surveys The Best Banks to Work For program, initiated in 2013 by American Banker and Best Companies Group, identifies and recognizes U.S. banks for outstanding employee satisfaction. We are honored to have been named one of American Banker’s 2024 Best Banks to Work For, an award we have received for eight consecutive years.
The Federal Reserve has released a supervisory letter advising, among other things, that a bank holding company should inform the Federal Reserve and should eliminate, defer, or significantly reduce its dividends if (i) the bank holding company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the bank holding company’s prospective rate of earnings is not consistent with the bank holding company’s capital needs and overall current and prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
The Federal Reserve has released a supervisory letter advising, among other things, that a bank holding company should inform the Federal Reserve and should eliminate, defer, or significantly reduce its dividends if (i) the bank holding company’s net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the bank holding company’s prospective rate of earnings is not consistent with the bank holding company’s capital needs and overall current and prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. 14 Transactions with Affiliates Federal banking laws restrict transactions between a bank and its affiliates, including a parent bank holding company.
There are statutory and regulatory requirements applicable to the payment of dividends and other distributions by the Bank, as well as by the Holding Company to its shareholders. 13 During 2023, 2022 and 2021, the Bank paid dividends to the Holding Company of $198 million, $133 million and $217 million, respectively.
There are statutory and regulatory requirements applicable to the payment of dividends and other distributions by the Bank, as well as by the Holding Company to its shareholders. 13 During 2024, 2023, and 2022, the Bank paid dividends to the Holding Company of $153 million, $198 million and $133 million, respectively.
During 2023, the Bank originated $903 million in residential mortgage loans for the purchase of homes and to refinance existing mortgage debt. Approximately 50% of these mortgages were sold into the secondary market without recourse to us, other than for breaches of warranties. We have retained the servicing on most of our mortgage loans sold.
During 2024, the Bank originated $870 million in residential mortgage loans for the purchase of homes and to refinance existing mortgage debt. Approximately 70% of these mortgages were sold into the secondary market without recourse to us, other than for breaches of warranties. We have retained the servicing on most of our mortgage loans sold.
In addition, the federal bank regulatory agencies, including the FDIC, restrict concentrations in commercial real estate lending and have noted that increases in banks’ commercial real estate concentrations can create safety and soundness concerns. The regulatory guidance mandates certain minimal risk management practices and categorizes banks with defined levels of such concentrations as banks requiring elevated examiner scrutiny.
In addition, the federal bank regulatory agencies restrict concentrations in CRE lending and have noted that increases in banks’ CRE concentrations can create safety and soundness concerns. The regulatory guidance mandates certain minimal risk management practices and categorizes banks with defined levels of such concentrations as banks requiring elevated examiner scrutiny.
The Holding Company declared quarterly cash dividends on its common stock in 2023, 2022 and 2021 totaling $0.92, $0.86 and $0.78 per share, respectively.
The Holding Company declared quarterly cash dividends on its common stock in 2024, 2023, and 2022 totaling $0.94, $0.92 and $0.86 per share, respectively.
Our registered broker-dealer subsidiary is subject to the SEC’s net capital rule, Rule 15c3-1. That rule requires the maintenance of minimum net capital and limits the ability of the broker-dealer to transfer large amounts of capital to a parent company or affiliate. Compliance with the rule could limit operations that require intensive use of capital, such as underwriting and trading.
That rule requires the maintenance of minimum net capital and limits the ability of the broker-dealer to transfer large amounts of capital to a parent company or affiliate. Compliance with the rule could limit operations that require intensive use of capital, such as underwriting and trading.
We are required to file with the Federal Reserve annual reports and such additional information as the Federal Reserve may require pursuant to the BHC Act. 12 Effective July 1, 2021, the Holding Company elected to become a financial holding company, which allows for engagement in a broader range of financial activities.
We are required to file with the Federal Reserve annual reports and such additional information as the Federal Reserve may require pursuant to the BHC Act. 12 The Holding Company being a financial holding company allows for engagement in a broader range of financial activities.
W e operate a risk management process for assessing risk in incentive compensation plans. 17 The Federal Reserve reviews, as part of its regular, risk-focused examination process, the incentive compensation arrangements of financial institutions, including us, that are not “large, complex banking organizations.” These reviews are tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation arrangements.
The Federal Reserve reviews, as part of its regular, risk-focused examination process, the incentive compensation arrangements of financial institutions, including us, that are not “large, complex banking organizations.” These reviews are tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation arrangements.
There have been a number of significant enforcement actions by regulators, as well as state attorneys general and the Department of Justice, against banks, broker-dealers and non-bank financial institutions with respect to these laws and some have resulted in substantial penalties, including criminal pleas. Our Board has approved policies and procedures that it believes comply with these laws.
There have been a number of significant enforcement actions by regulators, as well as state attorneys general and the Department of Justice, against banks, broker-dealers and non-bank financial institutions with respect to these laws and some have resulted in substantial penalties, including criminal pleas.
Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including the termination of deposit insurance by the FDIC, and to certain restrictions on its business and in certain circumstances to the appointment of a conservator or receiver. See Prompt Corrective Action immediately below for additional information.
Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including the termination of deposit insurance by the FDIC, and to certain restrictions on its business and in certain circumstances to the appointment of a conservator or receiver.
As of December 31, 2023 we had consolidated total assets of $27.3 billion. As a financial holding company, we coordinate the financial resources of the consolidated enterprise and maintain systems of financial, operational, and administrative control intended to coordinate selected policies and activities, including as described in Item 9A of Part II.
As a financial holding company, we coordinate the financial resources of the consolidated enterprise and maintain systems of financial, operational, and administrative control intended to coordinate selected policies and activities, including as described in Item 9A of Part II.
The Bank’s low- and moderate-income community operations and activities traditionally are critical focal points in those assessments. 18 For purposes of CRA examinations, federal banking regulators rate each institution’s compliance with the CRA as “Outstanding,” “Satisfactory,” “Needs to Improve” or “Substantial Noncompliance.” A CRA rating below “Satisfactory” can slow or halt a bank’s plans to expand by branching, acquisition, or merger, and can prevent a bank holding company from becoming a financial holding company.
For purposes of CRA examinations, federal banking regulators rate each institution’s compliance with the CRA as “Outstanding,” “Satisfactory,” “Needs to Improve” or “Substantial Noncompliance.” A CRA rating below “Satisfactory” can slow or halt a bank’s plans to expand by branching, acquisition, or merger, and can prevent a bank holding company from becoming a financial holding compan y.
States are also increasingly proposing or enacting legislation that relates to data privacy and data protection such as the California Consumer Privacy Act which went into effect on January 1, 2020. We continue to assess the requirements of such laws and proposed legislation and their applicability to us.
States are also increasingly proposing or enacting legislation that relates to data privacy and data protection. We continue to assess the requirements of such laws and proposed legislation and their applicability to us.
Finally, investors should be aware that the regulatory framework governing banks and the financial services industry is intended primarily to protect depositors and the Deposit Insurance Fund – not to protect our Bank or our security holders.
We are unable to predict these future changes or the effects, if any, that these changes could have on our business. Finally, investors should be aware that the regulatory framework governing banks and the financial services industry is intended primarily to protect depositors and the Deposit Insurance Fund – not to protect our Bank or our security holders.
Among other things, the survey asks employees to rate and comment on the Bank’s strategies and priorities, customer focus, operations, individual roles and responsibilities, competitiveness for compensation and benefits, work environment and employee engagement.
Among other things, the survey asks employees to rate and comment on the Bank’s strategies and priorities, customer focus, operations, individual roles and responsibilities, competitiveness for compensation and benefits, work environment and employee engagement. The survey includes questions that ask employees to score certain questions, as well as allowing employees to provide open-ended feedback responses.
In accordance with the special assessment, United will pay $10.0 million over eight quarters beginning with the first quarterly assessment period of 2024.
In accordance with the special assessment, United will pay $11.7 million over ten quarters, which began with the first quarterly assessment period of 2024.
ITEM 1. BUSINESS Overview United Community Banks, Inc. is a Georgia corporation incorporated in 1987 and headquartered in Blairsville, Georgia. We are a bank holding company under the BHC Act and a financial holding company under the GLB Act. We provide diversified financial services primarily through our principal subsidiary, United Community Bank.
ITEM 1. BUSINESS Overview United Community Banks, Inc. is a Georgia corporation incorporated in 1987 and headquartered in Greenville, South Carolina. We are a bank holding company under the BHC Act and a financial holding company under the GLB Act. In May 2024, we officially moved our Holding Company headquarters from Blairsville, Georgia to Greenville, South Carolina.
The Bank is subject to examination and reporting requirements of the FDIC, the SCBFI and the CFPB. The financial statements and information contained herein have not been reviewed, or confirmed for accuracy or relevance, by the FDIC or any other regulator.
The financial statements and information contained in this Report have not been reviewed, or confirmed for accuracy or relevance, by the FDIC, Federal Reserve or any other regulator. The Bank is insured by the FDIC and is subject to regulation by the Federal Reserve and, in certain respects, by the CFPB.
Depositor Preference Federal law provides that deposits and certain claims for administrative expenses and associate compensation against an insured depository institution would be afforded a priority over other general unsecured claims against such an institution, including federal funds and letters of credit, in the “liquidation or other resolution” of such an institution by any receiver. 20 Securities Regulation Certain of our subsidiaries are subject to various securities laws and regulations and capital adequacy requirements promulgated by the regulatory and exchange authorities of the jurisdictions in which they operate.
Our Board has approved policies and procedures that it believes comply with these laws. 20 Depositor Preference Federal law provides that deposits and certain claims for administrative expenses and associate compensation against an insured depository institution would be afforded a priority over other general unsecured claims against such an institution, including federal funds and letters of credit, in the “liquidation or other resolution” of such an institution by any receiver.
We believe that encouraging input from all perspectives allows us to provide our customers with creative ideas and solutions for operating effectively in a complex, ever-changing marketplace. 10 In 2020, we formed the “Power of U,” an advisory group comprised of a cross functional representation of non-management employees.
We believe that encouraging input from all perspectives allows us to provide our customers with creative ideas and solutions for operating effectively in a complex, ever-changing marketplace.
In addition, the First Miami acquisition enhanced our offerings of non-traditional bank products - private banking, trust and wealth management. Principal Businesses and Services We Provide We provide a wide range of financial products and services to the commercial, retail, governmental, educational, energy, health care and real estate sectors.
Principal Businesses and Services We Provide We provide a wide range of financial products and services to the commercial, retail, governmental, educational, energy, health care and real estate sectors.
We also originate loans partially guaranteed by the SBA and to a lesser extent by the USDA loan programs. Our consolidated loans at December 31, 2023 were $18.3 billion, or 67% of total consolidated assets.
Lending Activities We offer a full range of lending services to individuals, small and mid-sized businesses and non-profit organizations. We also originate loans partially guaranteed by the SBA and, to a lesser extent, by the USDA loan programs. Our consolidated loans at December 31, 2024 were $18.2 billion, or 66% of total consolidated assets.
If this fifth requirement ceases to be met after a bank controls or holds an interest in a financial subsidiary, the bank cannot invest additional capital in that subsidiary until the requirement again is met. 19 No new activity may be commenced unless the bank and all of its depository institution affiliates have at least “Satisfactory” CRA ratings.
Secretary of the Treasury from time to time. If this fifth requirement ceases to be met after a 19 bank controls or holds an interest in a financial subsidiary, the bank cannot invest additional capital in that subsidiary until the requirement again is met.
In addition, the Bank is required to have a capital structure that the SCBFI determines is adequate, based on SCBFI’s assessment of the Bank’s businesses and risks.
See Prompt Corrective Action immediately below for additional information. 15 In addition, the Bank is required to have a capital structure that the SCBFI determines is adequate, based on SCBFI’s assessment of the Bank’s businesses and risks. The SCBFI may require the Bank to increase its capital, if found to be inadequate.
For this purpose, insured depository institutions are divided into five capital categories, the specific regulatory requirements for which are set forth in the following table.
Prompt Corrective Action Federal banking regulators must take “prompt corrective action” regarding FDIC-insured depository institutions that do not meet minimum capital requirements. For this purpose, insured depository institutions are divided into five capital categories, the specific regulatory requirements for which are set forth in the following table.
Our leadership analyzes the survey feedback for areas of improvement, progress and emphasis, and action plans are developed with cross functional bank representatives to address areas of opportunity. Our leadership takes the survey feedback into account in developing and prioritizing the Bank’s strategic plans and initiatives.
The employee engagement survey results are reviewed and discussed by both executive management and our Board. Our leadership analyzes the survey feedback for areas of improvement, progress and emphasis, and action plans are developed with cross functional 11 bank representatives to address areas of opportunity.
As of December 31, 2023, we are a financial holding company and we have a number of financial subsidiaries, as discussed in Subsidiaries in this Item. Privacy and Data Security The Federal Reserve, FDIC and other bank regulatory agencies have adopted guidelines for safeguarding confidential, personal customer information.
Privacy and Data Security The Federal Reserve, FDIC and other bank regulatory agencies have adopted guidelines for safeguarding confidential, personal customer information.
Once a bank has established branches in a state through de novo or acquired branching or through an interstate merger transaction, the bank may then establish or acquire additional branches within that state to the same extent that a bank chartered in that state is allowed to establish or acquire branches within the state.
Once a bank has established branches in a state through de novo or acquired branching or through an interstate merger transaction, the bank may then establish or acquire additional branches within that state to the same extent that a bank chartered in that state is allowed to establish or acquire branches within the state. 18 Community Reinvestment Act The CRA requires each U.S. bank, consistent with safe and sound operation, to help meet the credit needs of each community where the bank accepts deposits, including low- and moderate-income communities.
The Bank was founded in 1950 as a Georgia state-chartered bank and converted to a South Carolina state-chartered bank effective on July 1, 2021. We have grown through a combination of acquisitions and strategic growth throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama as well as nationally through our SBA/USDA lending and equipment finance businesses.
We have grown through a combination of strategic acquisitions and organic growth throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama as well as nationally through our SBA/USDA lending and equipment finance businesses. As of December 31, 2024, we had consolidated total assets of $27.7 billion.
Certain restrictions apply if the bank holding company or the bank fails to continue to meet one or more of the requirements listed above. In addition, federal law contains a number of other provisions that may affect the Bank’s operations, including limitations on the use and disclosure to third parties of client information.
In addition, federal law contains a number of other provisions that may affect the Bank’s operations, including limitations on the use and disclosure to third parties of client information. As of December 31, 2024, we are a financial holding company and we have financial subsidiaries, as discussed in Subsidiaries in this Item.
Oversight and Management Our Board and its Talent and Compensation Committee provide oversight on human capital matters, including overall compensation philosophy, equity award programs, diversity and inclusion and succession planning.
It provides alternative channels of communication for team members to ensure that ideas, suggestions, and issues that come from any level of the organization are shared with senior leadership. Oversight and Management Our Board and its Talent and Compensation Committee provide oversight on human capital matters, including overall compensation philosophy, equity award programs, diversity and inclusion and succession planning.
The Power of U offers two-way communication between employees from across the organization and between employees and management, adding social factors contributing to a culture of belonging, reward, recognition and engagement. It provides alternative channels of communication for team members to ensure that ideas, suggestions, and issues that come from the ground floor are shared with senior leadership.
We have a “Power of U” advisory group that offers two-way communication between employees from across the organization and between employees and management, adding social factors contributing to a culture of belonging, reward, recognition and 10 engagement.
Certain of our subsidiaries are registered investment advisers which are regulated under the Investment Advisers Act of 1940. Advisory contracts with clients automatically terminate under these laws upon an assignment of the contract by the investment adviser unless appropriate consents are obtained. Insurance Activities Certain of our subsidiaries sell various types of insurance as agent in a number of states.
FinTrust Capital Advisors, LLC operated as a registered investment adviser which was regulated under the Investment Advisers Act of 1940 until the sale of FinTrust in the fourth quarter of 2024. Insurance Activities Certain of our subsidiaries sell various types of insurance as agent in a number of states.
In its most recent CRA examination, the Bank received a “Satisfactory” rating. The Federal Reserve, the OCC, and the FDIC have adopted revised CRA regulations based upon rules adopted jointly by the agencies in 1995. These rules were effective January 1, 2022. Financial Activities other than Banking Permitted Activities.
In its most recent CRA examination, the Bank received a “Satisfactory” rating. Financial Activities other than Banking Permitted Activities.
We also operate FinTrust Brokerage Services, LLC, a registered broker dealer. Through our United Community Advisory Services division, we generate fee revenue through the sale of non-deposit investment products and insurance products, including life insurance, long-term care insurance and tax-deferred annuities, to our customers.
We offer insurance products and services to our clients through United Community Insurance, Inc., which operates as an independent insurance agency for our customers. Within our United Community Private Wealth division, United Community Advisors sells non-deposit investment products and insurance products, including life insurance, long-term care insurance and tax-deferred annuities, to our customers.
Changes in fair value on AFS securities are generally recorded directly in our shareholders’ equity account and are not recognized in our income statement. Wealth Management, Trust, and Insurance Through our Wealth Management division, we provide financial planning services, customized portfolio management and investment advice utilizing an open architecture approach to the selection of asset managers.
Private Banking, Wealth Management, Trust, and Insurance Through our United Community Private Wealth division, we provide private banking, investment management, investment advice, financial planning services, estate and retirement planning and insurance products. We utilize an open architecture approach to the selection of asset managers. We also offer trust services to manage fiduciary assets.
We have an affiliation with a third party broker/dealer, LPL Financial, to facilitate this line of business. 8 Reinsurance and Merchant Services We own a captive insurance subsidiary, NLFC Reinsurance Corp., which provides reinsurance on a property insurance contract covering equipment financed by our equipment financing division.
We have an affiliation with a third-party broker/dealer, LPL Financial, to facilitate this line of business. 8 On October 1, 2024, we sold substantially all of the assets of our FinTrust Capital Advisors, LLC and FinTrust Brokerage Services, LLC, which offered investment advisory and brokerage services.
Technical and regulatory details follow: • The Bank is supervised and regulated as described in Supervision and Regulation in this Item below. • FinTrust Capital Advisors, LLC and Seaside Capital Management, Inc. are registered with the SEC as investment advisers. • Seaside Capital Management, Inc. is registered with the State of Florida as an investment adviser. • FinTrust Brokerage Services, LLC is registered as a broker-dealer with the SEC and all states in which it conducts business for which registration is required and is a Member FINRA/SIPC. • FinTrust Insurance and Benefits, Inc. is licensed as an insurance agency in all states in which it conducts business for which licensing is required.
Our principal subsidiary is the Bank, which is supervised and regulated as described in Supervision and Regulation in this Item below. United Community Insurance, Inc., which is licensed as an insurance agency as required in states in which it conducts business, is another of our consolidated subsidiaries.
Community Reinvestment Act The CRA requires each U.S. bank, consistent with safe and sound operation, to help meet the credit needs of each community where the bank accepts deposits, including low- and moderate-income communities. Federal banking regulators periodically assess the Bank for CRA compliance and that assessment is made public.
Federal banking regulators periodically assess the Bank for CRA compliance and that assessment is made public. The Bank’s low- and moderate-income community operations and activities traditionally are critical focal points in those assessments.
We believe that this combination of service and expertise sets us apart and is instrumental in our strategy to build long-term relationships. 7 Lending Activities We offer a full range of lending services, including real estate, consumer and commercial loans, to individuals, small businesses, mid-sized commercial businesses and non-profit organizations.
We believe that this combination of service and expertise sets us apart and is instrumental in our strategy to build long-term relationships. 7 In 2024, we became a 10-time winner of J.D. Power’s award for the best customer satisfaction among consumer banks in the Southeast region and were recognized as the most trusted bank in the Southeast.
Removed
Recent Developments Acquisition of Progress On January 3, 2023, we completed the acquisition of Progress, a bank headquartered in Huntsville, Alabama. Progress operated 13 branches in Alabama and the Florida Panhandle. In this acquisition, we acquired total assets of $1.90 billion, including total loans of $1.44 billion, and total liabilities of $1.60 billion, including deposits of $1.33 billion.
Added
We provide diversified financial services primarily through our principal subsidiary, United Community Bank, which was founded in 1950 as a Georgia state-chartered bank and converted to a South Carolina state-chartered bank in 2021.
Removed
Acquisition of First Miami On July 1, 2023, we completed the acquisition of First Miami, a bank headquartered in South Miami, Florida. First Miami operated 3 offices in the Miami metropolitan area. In this acquisition, we acquired total assets of $1.02 billion, including total loans of $577 million, and total liabilities of $931 million, including total deposits of $865 million.
Added
Recent Developments • Effective June 2024, the Bank changed its primary federal regulator from the FDIC to the Federal Reserve. • Effective August 6, 2024, we transferred the listing of our securities from Nasdaq to the NYSE.
Removed
We also offer trust services to manage fiduciary assets. Seaside Capital Management, Inc. and FinTrust Capital Advisors, LLC are registered investment advisors that offer investment advisory services for clients who wish to utilize an independent custodian. FinTrust Insurance and Benefits, Inc. operates as an independent insurance agency for our clients.
Added
Our common shares now trade under the symbol UCB and our preferred Series I depositary shares now trade under the symbol UCB PRI. • In September of 2024, we sold $303 million of manufactured housing loans, which was substantially all of that portfolio, and recognized a pre-tax loss of $27.2 million.
Removed
The survey includes questions that ask employees to score certain questions, as well as allowing employees to provide open-ended feedback responses. 11 The employee engagement survey results are reviewed and discussed by both executive management and our Board.
Added
Selling the portfolio reduced risk and allowed us to redirect our management and capital resources to activities that better align with our strategic objectives. • On October 1, 2024, we completed the sale of FinTrust, which was a subsidiary of the Holding Company.
Removed
These statutes and regulations are subject to change, and additional statutes, regulations, and corresponding guidance may be adopted. We are unable to predict these future changes or the effects, if any, that these changes could have on our business.
Added
The sale allows us to prioritize the Bank’s private banking, investment management, and trust services delivered through our United Community Private Wealth and United Community Advisors businesses. • On December 3, 2024, we announced an agreement to acquire ANB, a bank headquartered in Oakland Park, Florida, located in the Fort Lauderdale metropolitan area.
Removed
Effective July 1, 2021, the Bank moved its headquarters from Blairsville, Georgia to Greenville, South Carolina and became a South Carolina state-chartered bank subject to examination and reporting requirements of the SCBFI. Prior to that date, the Bank was a Georgia state-chartered bank subject to examination and reporting requirements of the GADBF.
Added
As of December 31, 2024, ANB had total assets of $423 million, total loans of $312 million and total deposits of $360 million. The acquisition is expected to close in the second quarter of 2025, subject to regulatory and ANB shareholder approval.
Removed
The Bank is insured by, and subject to regulation by, the FDIC and is subject to regulation in certain respects by the CFPB.
Added
Also in 2024, we were recognized in the Greenwich Excellence and Best Brands Awards, receiving 15 awards that included national honors for overall satisfaction in small business banking and middle market banking. Forbes has also consistently listed us as one of the World’s Best Banks and one of America’s Best Banks.
Removed
The application of those restrictions to the Bank is discussed in more det ail in Note 1, Summary of Significant Accounting Policies, of Part II, Item 8. Financial Statements, which is incorporated into this Item 1 by reference.
Added
Changes in fair value on AFS securities are generally recorded directly in our shareholders’ equity account and are not recognized in our income statement. Securities classified by us as HTM are recorded at amortized cost.

… 16 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

80 edited+10 added−20 removed137 unchanged
Biggest changeThe nature of technology-driven disruption to our industry is changing, in some cases seeking to displace traditional financial service providers rather than merely enhance traditional services or their delivery. 23 A number of recent technologies have worked with the existing financial system and traditional banks, such as the evolution of ATM cards into debit/credit cards and the evolution of debit/credit cards into smart phones.
Biggest changeWhile we provide a large number of services remotely (online and mobile) and technology has helped us reduce costs and improve service, it has also weakened traditional geographic and relationship ties. 23 The nature of technology-driven disruption to our industry is changing, in some cases seeking to displace traditional financial service providers rather than merely enhance traditional services or their delivery.
These restrictions and other consequences of public health issues may result in significant adverse effects for many different types of businesses, including, among others, those in the hospitality (including hotels and lodging) and restaurant industries, and result in layoffs and furloughs of employees nationwide, including the regions in which we operate. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 35
These restrictions and other consequences of public health issues may result in significant adverse effects for many different types of businesses, including, among others, those in the hospitality (including hotels and lodging) and restaurant industries, and result in layoffs and furloughs of employees nationwide, including the regions in which we operate. 35 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
These risks include, without limitation, the following: • our inability to identify and expand into suitable markets; • our inability to identify and acquire suitable sites for new branches and service locations; • our inability to identify and execute potential acquisition targets; • our inability to develop accurate estimates and judgments to evaluate asset values and credit, operations, management and market risks with respect to an acquired branch or institution, a new branch office or a new market; • our inability to realize certain assumptions and estimates to preserve the expected financial benefits of the transaction; • our inability to avoid the diversion of our management’s attention from existing operations during the negotiation of a transaction; • our inability to manage successful entry into new markets where we have limited or no direct prior experience; • our inability to obtain regulatory and other approvals, or obtain such approvals without restrictive conditions; 22 • our inability to integrate the acquired business’ operations, clients, and properties quickly and cost-effectively; • our inability to manage cultural assimilation risks associated with growth through acquisitions, which can be an often-overlooked and often-critical failure point in mergers; • our inability to combine the franchise values of businesses that we acquire with those of ours without significant loss of employees or customers from re-branding and other similar changes; or • our inability to retain core clients and key employees.
These risks include, without limitation, our inability to do the following: • identify and expand into suitable markets; • identify and acquire suitable sites for new branches and service locations; • identify and execute potential acquisition targets; • develop accurate estimates and judgments to evaluate asset values and credit, operations, management and market risks with respect to an acquired branch or institution, a new branch office or a new market; • realize certain assumptions and estimates to preserve the expected financial benefits of the transaction; • avoid the diversion of our management’s attention from existing operations during the negotiation of a transaction; • manage successful entry into new markets where we have limited or no direct prior experience; • obtain regulatory and other approvals, or obtain such approvals without restrictive conditions; • integrate the acquired business’ operations, clients, and properties quickly and cost-effectively; • manage cultural assimilation risks associated with growth through acquisitions, which can be an often-overlooked and often-critical failure point in mergers; • combine the franchise values of businesses that we acquire with those of ours without significant loss of employees or customers from re-branding and other similar changes; or • retain core clients and key employees.
Loan repayments are a relatively stable 29 source of funds but are subject to the borrowers’ ability to repay loans, which can be adversely affected by a number of factors including changes in general economic conditions, adverse trends or events affecting business industry groups or specific businesses, declines in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and other factors.
Loan repayments are a relatively stable source of funds but are subject to the borrowers’ ability to repay loans, which can be adversely affected by a number of factors including changes in general economic conditions, adverse trends or events affecting business industry groups or specific businesses, declines in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and other factors.
If our risk management framework is not effective, we could suffer unexpected losses and become subject to litigation, negative regulatory consequences, or reputational damage among other adverse consequences, any of which could result in our business, financial condition, results of operations or prospects being materially adversely affected. Competition for talent is substantial and increasing.
If our risk management framework is not effective, we could suffer unexpected losses and become subject to litigation, negative regulatory 25 consequences, or reputational damage among other adverse consequences, any of which could result in our business, financial condition, results of operations or prospects being materially adversely affected. Competition for talent is substantial and increasing.
Future dividends, if any, will be declared and paid at the Board’s discretion and will depend on a number of factors including, among others, asset quality, earnings performance, liquidity and capital requirements. Our principal source of funds used to pay cash dividends on our common and preferred stock is dividends that we receive from the Bank.
Future dividends, if any, will be declared and paid at the Board’s discretion and will depend on a number of factors including, among others, asset quality, earnings performance, liquidity and capital requirements. Our principal 33 source of funds used to pay cash dividends on our common and preferred stock is dividends that we receive from the Bank.
Maintaining and adapting our internal controls over financial reporting, disclosure controls and procedures and effective corporate governance policies and procedures (“controls and procedures”) is expensive and requires significant management attention. Moreover, as we continue to grow, our controls and procedures may become more complex and require additional resources to ensure they remain effective amid dynamic regulatory and other guidance.
Maintaining and adapting our internal controls over financial reporting, disclosure controls and procedures and effective corporate governance policies and procedures (“controls and procedures”) is expensive and requires significant management attention. Moreover, as we continue to grow, our controls and procedures may become more complex and require additional resources to ensure 32 they remain effective amid dynamic regulatory and other guidance.
We are less able than larger institutions to spread the risks of unfavorable local economic conditions across a larger number of more diverse economies. 32 Natural disasters and weather-related events exacerbated by climate change could have a negative impact on our results of operations and financial condition.
We are less able than larger institutions to spread the risks of unfavorable local economic conditions across a larger number of more diverse economies. Natural disasters and weather-related events, exacerbated by climate change, could have a negative impact on our results of operations and financial condition.
As interest rates change, we expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities (usually deposits and borrowings) will be more sensitive to changes in market interest rates than our interest-earning assets (usually loans and investment securities), or vice versa.
As interest rates change, we expect that we will periodically 27 experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities (usually deposits and borrowings) will be more sensitive to changes in market interest rates than our interest-earning assets (usually loans and investment securities), or vice versa.
Expanding in our current markets and selecting attractive new growth markets by opening additional branches and service locations or through acquisitions of all or part of other financial institutions involve risks, any one of which could result in a material and adverse effect upon our results of operation or financial condition.
Expanding in our current markets and selecting new growth markets by opening additional branches and service locations or through acquisitions of all or part of other financial institutions involve risks, any one of which could result in a material and adverse effect upon our results of operation or financial condition.
Inability to retain these key 25 personnel (including key personnel of the businesses we have acquired) or to continue to attract experienced lenders with established books of business could negatively affect our growth because of the loss of these individuals’ skills and customer relationships and/or the potential difficulty of promptly replacing them.
Inability to retain these key personnel (including key personnel of the businesses we have acquired) or to continue to attract experienced lenders with established books of business could negatively affect our growth because of the loss of these individuals’ skills and customer relationships and/or the potential difficulty of promptly replacing them.
In addition, we are subject to a wide array of other regulations that govern other aspects of how we conduct our business, such as in the areas of employment and intellectual property. Federal and state legislative and regulatory authorities often change these regulations or adopt new ones.
In addition, we are subject to a wide array of other regulations that govern other aspects of how we conduct our business, such as in the areas of 29 employment and intellectual property. Federal and state legislative and regulatory authorities often change these regulations or adopt new ones.
We operate in markets in which natural disasters, including tornadoes, severe storms, fires, floods, hurricanes and earthquakes have occurred. Such natural disasters could significantly affect the local population and economies, the activities of many of our customers and clients, and our business, and could pose physical risks to our properties.
We operate in markets in which natural disasters, including tornadoes, severe storms, fires, floods, hurricanes and earthquakes have occurred. Such natural disasters could significantly affect the local population and economies, the activities of many of our customers and clients, and our business, and could pose physical risks to our properties and those of our customers.
Even if these assumptions are adequate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation, including flaws caused by failures in controls, data management, human error or from the reliance on technology.
Even if these assumptions are adequate, the models themselves may prove to be inadequate or inaccurate because of other flaws in their design or their implementation, including flaws caused by failures in controls, data management, human error or from the reliance on technology.
For example, companies which claim to offer applications and services based on artificial intelligence are beginning to compete much more directly with traditional financial services companies in areas involving personal advice, including high-margin services such as financial planning and wealth management.
For example, companies which claim to offer applications and services based on artificial intelligence are beginning to compete much more directly with traditional financial services companies in areas involving personal advice, including high-margin services such as wealth management.
We maintain an ACL, which is a reserve established through a provision for credit losses charged to expense. The ACL reflects our assessment of the current expected losses over the life of the loan using historical experience, current conditions and reasonable and supportable forecasts.
We maintain an ACL, which is a reserve established through a provision for credit losses charged to expense. The ACL reflects our assessment of the current expected losses over the life of the loan portfolio using historical experience, current conditions and reasonable and supportable forecasts.
United’s amended and restated articles of incorporation, as amended (our “articles”), and bylaws, as amended (our “bylaws”), contain various provisions that could have an anti-takeover effect and may delay, discourage or prevent an attempted acquisition or change of control of United.
Our amended and restated articles of incorporation, as amended (our “articles”), and bylaws, as amended (our “bylaws”), contain various provisions that could have an anti-takeover effect and may delay, discourage or prevent an attempted acquisition or change of control of United.
These provisions include: • a provision allowing the Board to consider the interests of our employees, customers, suppliers and creditors when considering an acquisition proposal; • a provision that all amendments to the articles and bylaws must be approved by a majority of the outstanding shares of our capital stock entitled to vote; 34 • a provision requiring that any business combination involving United be approved by 75% of the outstanding shares of United’s common stock excluding shares held by stockholders who are deemed to have an interest in the transaction unless the business combination is approved by 75% of United’s directors; • a provision restricting removal of directors except for cause and upon the approval of two-thirds of the outstanding shares of our capital stock entitled to vote; • a provision that any special meeting of shareholders may be called only by the chairman, chief executive officer, president, chief financial officer, board of directors or the holders of 25% of the outstanding shares of United’s capital stock entitled to vote; and • a provision establishing certain advance notice procedures for matters to be considered at an annual meeting of shareholders.
These provisions include: • allowing the Board to consider the interests of our employees, customers, suppliers and creditors when considering an acquisition proposal; • that all amendments to the articles and certain portions of the bylaws must be approved by a majority of the outstanding shares of our capital stock entitled to vote; • requiring that any business combination involving United be approved by 75% of the outstanding shares of United’s common stock excluding shares held by stockholders who are deemed to have an interest in the transaction unless the business combination is approved by 75% of United’s directors; • restricting removal of directors except for cause and upon the approval of two-thirds of the outstanding shares of our capital stock entitled to vote; • that any special meeting of shareholders may be called only by the chairman, chief executive officer, president, chief financial officer, board of directors or the holders of 25% of the outstanding shares of United’s capital stock entitled to vote; and • establishing certain advance notice procedures for matters to be considered at an annual meeting of shareholders.
This Item highlights risks that could 21 affect us in material ways by causing future results to differ materially from past results, by causing future results to differ materially from current expectations, or by causing material changes in our financial condition.
This Item highlights risks that could affect us in material ways by causing future results to differ materially from past results, by causing future results to differ materially from current expectations, or by causing material changes in our financial condition.
If the Bank 33 is not permitted to pay cash dividends to the Holding Company, it is unlikely that we would be able to continue to pay dividends on our common stock or to pay interest on our indebtedness.
If the Bank is not permitted to pay cash dividends to the Holding Company, it is unlikely that we would be able to continue to pay dividends on our common stock or to pay interest on our indebtedness.
The spread of these diseases may result in quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, supply chain interruptions, and overall economic and financial market instability.
The spread of diseases may result in quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, supply chain interruptions, and overall economic and financial market instability.
Because of significant competitive pressures in our markets and the negative impact of these pressures on our deposit and loan pricing, coupled with the fact that a significant portion of our loan portfolio has variable rate pricing that moves in concert with changes to benchmark rates, our net interest margin may be negatively impacted if these short-term rates begin to decrease and we are unable to lower deposit pricing commensurately.
Because of significant competitive pressures in our markets and the negative impact of these pressures on our deposit and loan pricing, coupled with the fact that a significant portion of our loan portfolio has variable rate pricing that moves in concert with changes to benchmark rates, our net interest margin may be negatively impacted if these short-term rates continue to decrease and we are unable to lower deposit pricing commensurately.
Our network, and the systems of parties with whom we contract, could be vulnerable to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches. 24 Cyber threats are rapidly evolving and we may not be able to anticipate or prevent all such attacks.
Our network, and the systems of parties with whom we contract, could be vulnerable to unauthorized access, ransomware attacks, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches. Cyber threats are rapidly evolving and we may not be able to anticipate or prevent all such attacks.
It is also not uncommon for other financial institutions to deploy this strategy as well and there is a risk that teams of our employees may be recruited by other financial institutions. Additionally, operating our technology systems requires employees with specialized skills that are not readily available in the general employee candidate pool.
It is also common for other financial institutions to deploy this strategy as well and there is a risk that teams of our employees may be recruited by other financial institutions. Additionally, operating our technology systems requires employees with specialized skills that are not readily available in the general employee candidate pool.
Moreover, in some cases, especially concerning litigation and other contingency matters where critical information is inadequate, often we are unable to make estimates until fairly late in a lengthy process. In addition, changes in accounting standards or interpretations could negatively impact our reported earnings and financial condition.
Moreover, in some cases, especially concerning litigation and other contingency matters where critical information is inadequate, often we are unable to make estimates until fairly late in a lengthy process. In addition, changes in accounting standards or interpretations could negatively affect our reported earnings and financial condition.
Additionally, if we fail to remain “well-capitalized” our ability to utilize brokered deposits may be restricted. An inability to maintain or raise funds (including the inability to access secondary funding sources) in amounts necessary to meet our liquidity needs would have a substantial negative effect, individually or collectively, on our liquidity.
Additionally, if we fail to remain “well-capitalized” our ability to utilize brokered deposits may be restricted. An inability to maintain or raise funds (including the inability to access secondary funding sources) in amounts necessary to meet our liquidity needs would have a substantial negative effect on our liquidity.
In addition, our ability to raise funds is strongly affected by the general state of the U.S. and world economies and financial markets as well as the policies and capabilities of the U.S. government and its agencies, and may remain or become increasingly difficult due to economic and other factors beyond our control.
In addition, our ability to raise funds is strongly affected by the general state of the U.S. and world economies and financial markets as well as the policies and capabilities of the U.S. government and its agencies, and may become increasingly difficult due to economic and other factors beyond our control.
However, if short-term interest rates continue to rise, our results of operations may also be negatively impacted if we are unable to increase the rates we charge on loans or earn on our investment securities in excess of the increases we must pay on deposits and our other funding sources.
However, if short-term interest rates were to rise, our results of operations may also be negatively impacted if we are unable to increase the rates we charge on loans or earn on our investment securities in excess of the increases we must pay on deposits and our other funding sources.
The processes we use to estimate our expected credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depends upon the use of analytical and forecasting models.
The processes we use to estimate our expected credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depend upon the use of analytical and forecasting models.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. RISKS FROM CHANGES IN ECONOMIC CONDITIONS Inflationary pressures present a potential threat to our results of operations and financial condition.
Any such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. RISKS FROM CHANGES IN ECONOMIC CONDITIONS AND MONETARY POLICY Inflationary pressures present a potential threat to our results of operations and financial condition.
There have been several recent instances involving financial services, credit bureaus and consumer-based companies reporting the unauthorized disclosure of client or customer information or the destruction or theft of corporate data, by both private individuals and foreign governments.
There have been several instances involving financial services, credit bureaus and consumer-based companies reporting the unauthorized disclosure of client or customer information or the destruction or theft of 24 corporate data, by both private individuals and foreign governments.
While our Board, since 2013, has approved the payment of a quarterly cash dividend on our common stock, there can be no assurance whether or when we may pay dividends in the future.
While our Board has approved the payment of a quarterly cash dividend on our common stock, there can be no assurance whether or when we may pay dividends in the future.
Negative public opinion could also result from adverse news or publicity that impairs the reputation of the financial services industry generally, such as recent bank failures, or that relates to parties with whom we have important relationships. Because we conduct most of our business under the “United” brand, negative public opinion about one business could affect our other businesses.
Negative public opinion could also result from adverse news or publicity that impairs the reputation of the financial services industry generally, such as bank failures, or that relates to parties with whom we have important relationships. Because we conduct most of our business under the “United Community” brand, negative public opinion about one business could affect our other businesses.
Additionally, United’s articles authorize the Board to issue shares of preferred stock without shareholder approval and upon such terms as the Board may determine.
Additionally, our articles authorize the Board to issue shares of preferred stock without shareholder approval and upon such terms as the Board may determine.
Pandemics and widespread outbreaks of communicable diseases may cause significant disruption in the international and United States economies and financial markets and could have an adverse effect on our business and results of operations.
Widespread outbreaks of communicable diseases and acts of terrorism may cause significant disruption in the international and United States economies and financial markets and could have an adverse effect on our business and results of operations.
These risks include, without limitation, the following: • our inability to attract and retain clients in our banking market areas, particularly as we integrate our recent acquisitions, including Progress and First Miami; • our inability to achieve and maintain growth in our earnings while pursuing new business opportunities; • our inability to maintain a high level of client service while optimizing our physical branch count due to changing client demand, all while expanding our remote banking services and expanding or enhancing our information processing, technology, compliance, and other operational infrastructures effectively and efficiently; • our inability to maintain loan quality while, at the same time, creating loan growth; • our inability to attract sufficient deposits and capital to fund anticipated loan growth; • our inability to maintain adequate common equity and regulatory capital while managing the liquidity and capital requirements associated with growth, especially organic growth and cash-funded acquisitions; • our inability to hire or retain adequate management personnel and systems to oversee and support such growth; • our inability to implement additional policies, procedures and operating systems required to support our growth; • our inability to manage effectively and efficiently the changes and adaptations necessitated by a complex, burdensome, and evolving regulatory environment.
These risks include, without limitation, our inability to do the following: • attract and retain clients in our banking market areas; • achieve and maintain growth in our earnings while pursuing new business opportunities; • maintain a high level of client service while optimizing our physical branch count due to changing client demand, all while expanding our remote banking services and expanding or enhancing our information processing, technology, compliance, and other operational infrastructures effectively and efficiently; 22 • maintain loan quality while, at the same time, creating loan growth; • attract sufficient deposits and capital to fund anticipated loan growth; • maintain adequate common equity and regulatory capital while managing the liquidity and capital requirements associated with growth, especially organic growth and cash-funded acquisitions; • hire or retain adequate management personnel and systems to oversee and support such growth; • implement additional policies, procedures and operating systems required to support our growth; • manage effectively and efficiently the changes and adaptations necessitated by a complex, burdensome, and evolving regulatory environment.
These sorts of technologies often have expanded the market for banking services overall while siphoning a portion of the revenues from those services away from banks and disrupting prior methods of delivering those services. Additionally, some recent innovations may tend to replace traditional banks as financial service providers rather than merely augmenting those services.
These sorts of technologies often have expanded the market for banking services overall while siphoning a portion of the revenues from those services away from banks and disrupting prior methods of delivering those services. Additionally, some innovations and niche providers may tend to replace traditional banks as financial service providers, deposit-keepers and intermediaries rather than merely augmenting those services.
Holders of our indebtedness and of depositary shares related to our Series I preferred stock have rights that are senior to those of our common shareholders. At December 31, 2023, we had outstanding senior debentures, subordinated debentures, trust preferred securities and accompanying subordinated debentures and preferred stock totaling $413 million.
Holders of our indebtedness and of depositary shares related to our Series I preferred stock have rights that are senior to those of our common shareholders. At December 31, 2024, we had outstanding senior debentures, subordinated debentures, trust preferred securities and accompanying subordinated debentures and preferred stock totaling $342 million.
Although we model multiple scenarios assuming differing interest rate curves and economic events, it is not possible that our modeling can anticipate every scenario or how one assumption may be influenced by changes in another assumption.
Although we model multiple scenarios assuming differing interest rate curves and economic events, it is not possible for our modeling to anticipate every scenario or how one assumption may be influenced by changes in another assumption.
Fluctuations in interest rates have had and can continue to have significant and sometimes adverse effects upon our business as well as the business of many of our customers. See Risks Associated With Monetary Events and Interest Rate and Yield Curve Risks in this Item 1A of this Report.
Fluctuations in interest rates have had and can continue to have significant and sometimes adverse effects upon our business as well as the business of many of our customers. See Interest Rate and Yield Curve Risks in this Item 1A of this Report.
The United States generally and the regions in which we operate specifically have recently experienced, for the first time in decades, significant inflationary pressures, evidenced by higher gas prices, higher food prices and other consumer items.
In recent years, the United States generally and the regions in which we operate specifically have experienced, for the first time in decades, significant inflationary pressures, evidenced by higher gas prices, higher food prices and higher prices on other consumer items.
MD&A; and Note 22 Regulatory Matters, of Part II, Item 8. Financial Statements.
MD&A; and Note 21 Regulatory Matters, of Part II, Item 8. Financial Statements.
If that region of the U.S. did not grow or was to experience adversity not shared by other parts of the country, for example the risk of hurricanes in Florida and the Carolina coasts, we would likely experience adversity to a degree not shared by those competitors which have a broader or different regional footprint.
If that region of the U.S. did not grow or was to experience adversity not shared by other parts of the country, for example the risk of hurricanes in our geographic footprint, we would likely experience adversity to a degree not shared by those competitors which have a broader or different regional footprint.
In addition, larger institutions may have the advantage of being perceived by the public as more secure in times of financial uncertainty as evidenced by the migration of deposits to large banks in response to recent bank failures.
In addition, larger institutions may have the advantage of being perceived by the public as more secure in times of financial uncertainty as evidenced by the migration of deposits to large banks in response to certain bank failures that occurred in 2023.
As of December 31, 2023, approximately 73% of our loan portfolio consisted of commercial loans, including commercial and industrial, equipment 27 financing, commercial construction and commercial real estate mortgage loans. Our borrowers under these loans tend to be small to medium-sized businesses. These types of loans are typically larger than residential real estate loans or consumer loans.
As of December 31, 2024, approximately 74% of our loan portfolio consisted of commercial loans, including commercial and industrial, equipment financing, commercial construction and CRE mortgage loans. Our commercial borrowers tend to be small to medium-sized businesses. These types of loans are typically larger than residential real estate loans or consumer loans.
In the future, we expect to continue to nurture profitable organic growth as well as pursue acquisitions or strategic transactions if appropriate opportunities, within or outside of our current markets, present themselves. Our failure or inability to successfully implement those strategies could have a material and adverse effect on our results of operation and financial condition.
In the future, we expect to continue to nurture profitable organic growth as well as pursue acquisitions or strategic transactions if appropriate opportunities present themselves. Our failure or inability to successfully implement or adapt our strategy could have a material and adverse effect on our results of operation and financial condition.
MD&A of this Report for further discussion related to commercial and industrial, construction and commercial real estate loans. If our allowance for credit losses was required to be increased because it is not large enough to cover expected losses in our loan portfolio, our results of operations and financial condition could be materially and adversely affected.
MD&A of this Report for further discussion related to commercial and industrial, construction and CRE loans. If our allowance for credit losses is not large enough to cover losses in our loan portfolio, our results of operations and financial condition could be materially and adversely affected.
RISKS RELATED TO PUBLIC HEALTH ISSUES Pandemics and outbreaks of communicable diseases may lead to periods of significant volatility in financial and other markets, and could adversely affect our ability to conduct normal business, our clients, and could harm our businesses, financial condition and results of operations.
OTHER EXTERNAL RISKS Pandemics and outbreaks of communicable diseases, acts of terrorism and other adverse external events may lead to periods of significant volatility in financial and other markets, and could adversely affect our ability to conduct normal business and could harm our clients, businesses, financial condition and results of operations.
Although our current strategy is expected to evolve as business conditions change, in 2024 our strategy is to continue to invest resources in our banking businesses and operations as we integrate the businesses and operations of our recent acquisitions, including Progress and First Miami, and seek to exploit opportunities for cost and revenue synergies.
Although our strategy is expected to evolve as business conditions change, our current strategy is to continue to invest resources in our banking businesses and operations, including the businesses and operations we plan to integrate through any planned acquisitions, and seek to exploit opportunities for cost and revenue synergies.
See Risks Associated With Monetary Events and Interest Rate and Yield Curve Risks in this Item 1A of this Report. Generally, in periods of economic downturns, including periods of rising interest rates and recessions, our realized credit losses increase, demand for our products and services declines, and the credit quality of our loan portfolio declines.
See Interest Rate and Yield Curve Risks in this Item 1A of this Report. Generally, in periods of economic volatility, our realized credit losses increase, demand for our products and services declines, and the credit quality of our loan portfolio declines.
The estimate that is consistently one of our most critical is the level of the allowance for credit losses. However, other estimates can be highly significant at discrete times or during periods of varying length, for example the valuation (or impairment) of our deferred tax assets. Estimates are made at specific points in time.
The estimate that is consistently one of our most critical is the level of the allowance for credit losses. However, other estimates can be highly significant at discrete times or during periods of varying length. Estimates are made at specific points in time. As actual events unfold, estimates are adjusted accordingly.
Technology has helped us reduce costs and improve service, but also has weakened traditional geographic and relationship ties, and has allowed disruptors to enter traditional banking areas by providing payment and exchange services that compete directly with banks in ways not previously possible. Through digital marketing and service platforms, many banks are making client inroads unrelated to physical presence.
Technology has allowed disruptors to enter traditional banking areas by providing payment and exchange services that compete directly with banks in ways not previously possible. Through digital marketing and service platforms, these disruptors and other banks are making client inroads unrelated to physical presence.
Additionally, the use of artificial intelligence and quantum computing could exacerbate many of these risks. We may be required to spend significant capital and other resources to protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or viruses.
We may be required to spend significant capital and other resources to protect against the threat of security breaches and computer viruses, or to alleviate problems caused by security breaches or viruses.
Such a recession or any other adverse changes in business and economic conditions generally or specifically in the markets in which we operate could affect our business, including causing one or more of the following negative developments: • a decrease in the demand for loans and other products and services offered by us; • a decrease in the value of the collateral securing our residential or commercial real estate loans; • a permanent impairment of our assets; or • an increase in the number of customers or other counterparties who default on their loans or other obligations to us, which could result in a higher level of NPAs, net charge-offs and provision for loan losses. 26 RISKS ASSOCIATED WITH MONETARY EVENTS The Federal Reserve has implemented significant economic strategies that have affected interest rates, inflation, asset values, and the shape of the yield curve.
Adverse changes in business and economic conditions generally or specifically in the markets in which we operate could affect our business, including causing one or more of the following negative developments: • a decrease in the demand for loans and other products and services offered by us; • a decrease in the value of the collateral securing our residential or CRE loans; • a permanent impairment of our assets; or • an increase in the number of customers or other counterparties who default on their loans or other obligations to us, which could result in a higher level of NPAs, net charge-offs and provision for loan losses.
Deposit and loan fraud continue to be major sources of fraud attempts and loss. The sophistication and methods used to perpetrate fraud continue to evolve as technology changes.
OPERATIONAL RISKS Fraud is a major, and increasing, operational risk for us and all banks. Deposit and loan fraud continue to be major sources of fraud attempts and loss. The sophistication and methods used to perpetrate fraud continue to evolve as technology changes.
LIQUIDITY AND FUNDING RISK Liquidity is essential to our business model and a lack of liquidity, or an increase in the cost of liquidity, could materially impair our ability to fund our operations and jeopardize our results of operation, financial condition and cash flows.
Further general regulation to protect data privacy appears likely, and banking industry regulations might be enlarged as well. 30 LIQUIDITY AND FUNDING RISK Liquidity is essential to our business model and a lack of liquidity, or an increase in the cost of liquidity, could materially impair our ability to fund our operations and jeopardize our results of operation, financial condition and cash flows.
Our success depends significantly upon local, national and global economic and political conditions, as well as governmental monetary policies and trade relations.
Our success depends significantly upon local, national and global economic and political conditions, as well as governmental monetary policies and trade relations. Economic volatility may increase if the U.S. budget deficit continues to increase.
In addition, we could face increased regulatory, reputational and legal scrutiny as a result of climate risk. STOCK HOLDING AND GOVERNANCE RISKS The inability of our subsidiaries to declare and pay dividends or other distributions to the Holding Company could adversely affect its liquidity and ability to declare and pay dividends.
STOCK HOLDING AND GOVERNANCE RISKS The inability of our subsidiaries to declare and pay dividends or other distributions to the Holding Company could adversely affect its liquidity and ability to declare and pay dividends.
If the downgrade is due to lower earnings performance, elevated credit losses, capital deficiencies or other factors, collateral requirements for secured borrowings could also be elevated which could further limit our borrowing capacity and increase our borrowing costs.
If the downgrade is due to lower earnings performance, elevated credit losses, capital deficiencies or other factors, collateral requirements for secured borrowings could also be elevated which could further limit our borrowing capacity and increase our borrowing costs. 31 The proportion of our deposit account balances that exceed FDIC insurance limits may expose us to enhanced liquidity risk in times of financial distress.
Inflation represents a loss in purchasing power because the value of investments often does not keep up with inflation and erodes the purchasing power of money and the potential value of investments over time.
While inflationary pressure has lessened during 2024, the effects of inflation continue to present a risk to our business and our customers. Inflation represents a loss in purchasing power because the value of investments often does not keep up with inflation and erodes the purchasing power of money and the potential value of investments over time.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability which, in turn, could have a material adverse effect on our business, financial condition and results of operations. We may also be affected by the marketplace loosening of credit underwriting standards and structures.
Failures in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability which, in turn, could have a material adverse effect on our business, financial condition and results of operations. Failure to keep pace with technological changes could adversely affect our business.
If interest rates do not change in the manner anticipated, such transactions may not be effective and our results of operations may be adversely affected. A flat or inverted yield curve may reduce our net interest margin and adversely affect our loan and investment portfolios. The yield curve is a reflection of interest rates applicable to short and long-term debt.
Significant changes in the yield curve may reduce our net interest margin and adversely affect our loan and investment portfolios. The yield curve is a reflection of interest rates applicable to short and long-term debt.
In 2022 and through most of 2023, the Federal Reserve increased rates in response to inflation and, during much of this time, the yield curve was inverted. We cannot predict how long those conditions will exist. See Risks Associated with Monetary Events within this section of the Report for additional information.
In 2022 and through most of 2023, the Federal Reserve increased rates in response to inflation and, during much of this time, the yield curve was inverted. In September 2024, the yield curve became upward sloping, but remains relatively flat. See Risks Associated From Changes in Economic Conditions and Monetary Policy within this section of the Report for additional information.
Rising interest rates, inflation and a weakening economy adversely affect the ability of some borrowers to repay outstanding loans as well as the value of the collateral securing some of these loans. If loan customers with significant loan balances fail to repay their loans, our results of operations, financial condition and capital levels will suffer.
Rising interest rates, inflation and a weakening economy adversely affect the ability of some borrowers to repay outstanding loans as well as the value of the collateral securing some of these loans.
Negative public opinion could adversely affect our ability to keep and attract customers and expose us to adverse legal and regulatory consequences.
Our reputation is affected principally by our business practices and how those practices are perceived and understood by others. Negative public opinion could adversely affect our ability to keep and attract customers and expose us to adverse legal and regulatory consequences.
General market fluctuations, including real or anticipated changes in the strength of the local economy; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions; interest rate changes, oil price volatility or credit loss trends could also cause our stock price to decrease regardless of our operating results.
General market fluctuations, including real or anticipated changes in the strength of the local economy; industry factors and general economic and political conditions and events, such as economic slowdowns or recessions; interest rate changes, oil price volatility or credit loss trends could also cause our stock price to decrease regardless of our operating results. 34 Our corporate organizational documents and the provisions of Georgia law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition of United that you may favor.
Our competitors in these areas include national, state and non-U.S. banks, credit unions, savings and loan associations, consumer finance companies, mortgage banking firms, trust companies, securities brokerage firms, investment counseling firms, insurance companies and agencies, money market funds and other mutual funds, hedge funds and other financial services companies that serve in our markets.
Our competitors in these areas include other banks, credit unions, savings and loan associations, consumer finance companies, mortgage banking firms, trust companies, securities brokerage firms, investment counseling firms, insurance companies and agencies and other financial services companies. In addition, the emergence of non-traditional, disruptive service providers has intensified this competitive environment.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
The financial services industry has undergone and continues to undergo rapid change as a result of frequent new technological innovations, such as the use of artificial intelligence and machine learning. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
Uncertainties associated with ARRs also may affect our ability to effectively manage interest rate risk. 31 ACCOUNTING AND TAX RISKS The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make significant assumptions, estimates and judgments that affect the financial statements.
Under such circumstances, we may be required to access funding from sources such as the Federal Reserve’s discount window in order to manage our liquidity risk. ACCOUNTING AND TAX RISKS The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make significant assumptions, estimates and judgments that affect the financial statements.
These strategies have had, and will continue to have, a significant impact on our business and on many of our clients. In 2022 and much of 2023, in response to inflationary pressures, the Federal Reserve increased interest rates substantially.
The Federal Reserve has implemented significant economic strategies that have affected interest rates, inflation, asset values, and the shape of the yield curve. These strategies have had, and will continue to have, a significant impact on our business and on many of our clients.
Neither is a banking industry regulation, but both apply to banks in relation to certain clients. Further general regulation to protect data privacy appears likely, and banking industry regulations might be enlarged as well.
Neither is a banking industry regulation, but both apply to banks in relation to certain clients.
Our reputation is a key asset for us. Reputation risk, or the risk to our earnings, liquidity and capital from negative public opinion, is inherent in our business. Our reputation is affected principally by our business practices and how those practices are perceived and understood by others.
REPUTATION RISKS Our ability to conduct and grow our businesses, and to obtain and retain clients, is highly dependent upon external perceptions of our business practices and financial stability. Our reputation is a key asset for us. Reputation risk, or the risk to our earnings, liquidity and capital from negative public opinion, is inherent in our business.
Under such circumstances, we may be required to access funding from sources such as the Federal Reserve’s discount window or the Bank Term Funding Program in order to manage our liquidity risk. 30 INTEREST RATE AND YIELD CURVE RISKS We are subject to interest rate risk because a significant portion of our business involves borrowing and lending money, and investing in financial instruments.
Risks associated with interest rates and the yield curve are discussed in this Item 1A under the caption Interest Rate and Yield Curve Risks . INTEREST RATE AND YIELD CURVE RISKS We are subject to interest rate risk because a significant portion of our business involves borrowing and lending money, and investing in financial instruments.
While traditional banks are subject to the same regulatory framework as we are, nonbanks experience a significantly different or reduced degree of regulation as well as lower cost structures. We may face a competitive disadvantage as a result of our smaller size, more limited geographic diversification and inability to spread costs across broader markets.
We may face a competitive disadvantage as a result of our smaller size, more limited geographic diversification and inability to spread costs across broader markets. We may also be affected by the marketplace loosening of credit underwriting standards and structures.
Some of these risks are interrelated and the occurrence of one or more of them may exacerbate the effect of others. TRADITIONAL COMPETITION RISKS We are subject to intense competition for clients and the nature of that competition is rapidly evolving.
Some of these risks are interrelated and the occurrence of one or more of them may exacerbate the effect of others. STRATEGIC RISKS We may be unable to successfully implement our strategy to grow our banking businesses.
Moreover, the importance of specific risks will grow or diminish as circumstances change. 28 Failure to maintain certain regulatory capital levels and ratios could result in regulatory actions that would be materially adverse to our shareholders.
Additionally, we expect the incoming federal administration will implement a regulatory reform agenda that is significantly different than that of the prior administration, affecting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. Failure to maintain certain regulatory capital levels and ratios could result in regulatory actions that would be materially adverse to our shareholders.
Our primary areas of competition include: consumer and commercial deposits, commercial loans, consumer loans including home mortgages and lines of credit, financial planning and wealth management and other consumer and commercial financial products and services.
COMPETITION AND INDUSTRY DISRUPTION RISKS We are subject to intense competition for clients and the nature of that competition is rapidly evolving. Our primary areas of competition are deposits, loans, wealth management, trust, and other consumer and commercial financial products and services.
The proportion of our deposit account balances that exceed FDIC insurance limits may expose us to enhanced liquidity risk in times of financial distress. Uninsured deposits historically have been viewed by the FDIC as less stable than insured deposits.
Uninsured deposits historically have been viewed by the FDIC as less stable than insured deposits.
We are exposed to higher credit and concentration risk from our commercial real estate, commercial and industrial and commercial construction lending.
If loan customers with significant loan balances fail to repay their loans, our results of operations, financial condition and capital levels will suffer. 28 We are exposed to higher credit and concentration risk from our CRE, commercial and industrial and commercial construction lending.
In addition, as customer preferences and expectations continue to evolve, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as check-cashing, automatic transfer and automatic payment systems and “peer-to-peer” lending in which investors provide debt financing and/or capital directly to borrowers.
Also, as customer preferences and expectations continue to evolve, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks. While traditional banks are subject to the same regulatory framework as we are, nonbanks experience a significantly different or reduced degree of regulation as well as lower cost structures.

… 30 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+0 added−2 removed28 unchanged
Biggest changeFor example, a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyberattack involving destructive malware.
Biggest changeFor example, a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance of the institution’s operations after a cyberattack involving destructive malware. A rule issued by federal financial regulatory agencies imposes upon banking organizations and their service providers notification requirements for significant cybersecurity incidents.
That program, which is designed to identify, assess, manage, mitigate, and respond to cybersecurity threats, is integrated within our overall enterprise risk management and business continuity frameworks. We employ an in-depth, layered, defensive approach that leverages people, processes and technology to manage and maintain cybersecurity controls.
That program, which is designed to identify, assess, manage, mitigate, and respond to cybersecurity threats, is integrated within our overall enterprise risk management and business continuity frameworks. We employ an in-depth, layered, defensive approach that leverages people, 36 processes and technology to manage and maintain cybersecurity controls.
The Risk Committee receives regular updates on the status of our information security program, penetration testing results, infrastructure assessments, threat environment, security operations, operational events, vendor and supply chain security, and application/data security. On an annual basis, the CISO presents a cybersecurity program update to the Risk Committee. 37
The Risk Committee receives regular updates on the status of our information security program, penetration testing results, infrastructure assessments, threat environment, security operations, operational events, vendor and supply chain security, and application/data security. On an annual basis, the CISO presents a cybersecurity program update to the Risk Committee.
Other members of his team also hold CISSP certifications as well as CompTIA Security+, SANS Institute Cloud Security Essentials, SANS Institute GIAC Certified Enterprise Defender, SANS Institute Security Awareness Professional, Certified Information Security Manager, GIAC Certified Incident Handler, Certified in Risk and Information Systems Control, and GIAC Cyber Threat Intelligence certifications.
Other members of 37 his team also hold CISSP certifications as well as CompTIA Security+, SANS Institute Cloud Security Essentials, SANS Institute GIAC Certified Enterprise Defender, SANS Institute Security Awareness Professional, Certified Information Security Manager, GIAC Certified Incident Handler, Certified in Risk and Information Systems Control, and GIAC Cyber Threat Intelligence certifications.
That rule requires financial institutions to: (i) appoint a qualified individual to oversee and implement their information security programs; (ii) implement additional criteria for information security risk assessments; (iii) implement safeguards identified by assessments, including access controls, data inventory, data disposal, change management, and monitoring, among other things; (iv) implement information system monitoring in the form of either “continuous monitoring” or “periodic penetration testing;” (v) implement additional controls including training for security personnel, periodic assessment of service providers, written incident response plans, and periodic reports from the qualified individual to the board of directors.
The GLB Act’s Safeguards Rule requires financial institutions to: (i) appoint a qualified individual to oversee and implement their information security programs; (ii) implement additional criteria for information security risk assessments; (iii) implement safeguards identified by assessments, including access controls, data inventory, data disposal, change management, and monitoring, among other things; (iv) implement information system monitoring in the form of either “continuous monitoring” or “periodic penetration testing;” (v) implement additional controls including training for security personnel, periodic assessment of service providers, written incident response plans, and periodic reports from the qualified individual to the board of directors.
Responses may include, when appropriate and/or required, notification to regulatory agencies ( e.g., FDIC, FinCEN, SEC), authorities ( e.g., F.B.I., Department of Justice), customers, third parties or internal personnel.
Responses may include, when appropriate and/or required, notification to regulatory agencies ( e.g., Federal Reserve, FinCEN, SEC), authorities ( e.g., F.B.I., Department of Justice), customers, third parties or internal personnel.
The program is designed to allow for the detection and timely and efficient recovery from cybersecurity incidents (defined as unauthorized occurrences, or a series of related unauthorized occurrences, on or conducted through our information systems that jeopardize the confidentiality, integrity, or availability of those systems or any information residing therein) and events by providing a well-defined, organized approach for handling any potential threats to the confidentiality, integrity, and/or availability of our information systems. 36 In many instances we rely on third-party providers to facilitate providing products and services to our customers.
The program is designed to allow for the detection and timely and efficient recovery from cybersecurity incidents (defined as unauthorized occurrences, or a series of related unauthorized occurrences, on or conducted through our information systems that jeopardize the confidentiality, integrity, or availability of those systems or any information residing therein) and events by providing a well-defined, organized approach for handling any potential threats to the confidentiality, integrity, and/or availability of our information systems.
As a part of our overall cybersecurity risk management framework and, in addition to assessing our own cybersecurity preparedness, we also have a process in place to manage cybersecurity risks associated with third-party service providers.
In many instances we rely on third-party providers to facilitate providing products and services to our customers. As a part of our overall cybersecurity risk management framework and, in addition to assessing our own cybersecurity preparedness, we also have a process in place to manage cybersecurity risks associated with third-party service providers.
Removed
On April 1, 2022, a final rule issued by federal financial regulatory agencies became effective – that rule imposes upon banking organizations and their service providers notification requirements for significant cybersecurity incidents.
Removed
Additionally, effective December 9, 2022, amendments to the GLB Act’s Safeguards Rule went into effect.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed0 unchanged
Biggest changeOur retail branches, ATMs, loan and mortgage production offices, wealth management and administrative offices remain important to our ability to deliver financial services to a large portion of our clients. For many years, branch usage by clients has slowly declined, and for many years we have slowly consolidated branch locations in response to changing utilization patterns.
Biggest changeFor many years, branch usage by clients has slowly declined, and for many years we have slowly consolidated branch locations in response to changing utilization patterns. We expect that long-term trend to continue. We consider our properties to be suitable and adequate for operating our banking business.
We expect that long-term trend to continue. We consider our properties to be suitable and adequate for operating our banking business. Notes 7 and 14 to our consolidated financial statements include additional information regarding investments in premises and equipment and leased properties.
Notes 7 and 13 to our consolidated financial statements include additional information regarding investments in premises and equipment and leased properties.
As of December 31, 2023, we had a 207 branch network located throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama. We do not own or lease any single physical property that we consider to be materially important to our financial condition or results from operations.
We do not own or lease any single physical property that we consider to be materially important to our financial condition or results from operations. Our retail branches, ATMs, ITMs, loan and mortgage production offices and administrative offices remain important to our ability to deliver financial services to a large portion of our clients.
ITEM 2. PROPERTIES The Holding Company’s principal offices, which we own, are located at 125 Highway 515 East, Blairsville, Georgia. The Bank’s headquarters, which is a leased premises, is located at 2 West Washington Street, Suite 700, Greenville, South Carolina.
ITEM 2. PROPERTIES The Holding Company’s principal offices and the Bank’s headquarters, which we own, are located at 200 East Camperdown Way, Greenville, South Carolina. As of December 31, 2024, we operated 199 banking offices located throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS In the ordinary course of operations, we are parties to various legal proceedings and periodic regulatory examinations and investigations. There are no material pending legal proceedings to which we or any of our properties are subject. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 38 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS In the ordinary course of operations, we are parties to various legal proceedings and periodic regulatory examinations and investigations. There are no material pending legal proceedings to which we or any of our properties are subject. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+3 added−7 removed1 unchanged
Biggest changeITEM 5. MARKET FOR UNITED’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock. United’s common stock trades on the Nasdaq Global Select Market under the symbol “UCBI”. At January 31, 2024, there were 8,497 record shareholders of United’s common stock. Dividends.
Biggest changePrior to listing on the NYSE, United’s securities traded on the Nasdaq Global Select Market. At January 31, 2025, there were 9,499 record shareholders of United’s common stock. Dividends. Our Board declared cash dividends totaling $0.94 and $0.92 per share on our common stock in 2024 and 2023, respectively.
The following performance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate the performance graphs by reference therein.
The following perform ance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate the performance graphs by reference therein.
Total return includes reinvestment of dividends at the closing stock price of the common stock on the dividend payment date and the closing values of stock and indexes as of December 31 of each year. ITEM 6. RESERVED 40
Total return includes reinvestment of dividends at the closing stock price of the common stock on the dividend payment date and the closing values of stock and indexes as of December 31 of each year. ITEM 6. RESERVED 39
Additional information regarding dividends is included in this Report in Note 22 to our consolidated financial statements in Part II Item 8 Financial Statements and Supplementary Data, under the heading of “Supervision and Regulation” in Part I Item 1. Business and under the heading “Capital Resources and Dividends” in Part II, Item 7. MD&A. Share Repurchases .
Additional information regarding dividends is included in this Report in Note 1 to our consolidated financial statements in Part II Item 8 Financial Statements and Supplementary Data, under the heading of “Supervision and Regulation” in Part I Item 1. Business and under the heading “Capital Resources and Dividends” in Part II, Item 7. MD&A.
The following table contains information regarding purchases of our preferred stock made during the quarter ended December 31, 2023 by or on behalf of United or any “affiliated purchaser,” as defined by Rule 10b-18(a)(3) of the Exchange Act. We made no common stock repurchases during the fourth quarter of 2023.
We made no common stock or preferred stock repurchases during the quarter ended December 31, 2024 by or on behalf of United or any “affiliated purchaser,” as defined by Rule 10b-18(a)(3) of the Exchange Act. Performance Graph.
Our Board declared cash dividends totaling $0.92 and $0.86 per share on our common stock in 2023 and 2022, respectively. We currently intend to continue to pay comparable quarterly cash dividends on our common stock, subject to approval by our Board, although we may elect not to pay dividends or to change the amount of such dividends.
We currently intend to continue to pay comparable quarterly cash dividends on our common stock, subject to approval by our Board, although we may elect not to pay dividends or to change the amount of such dividends.
Cumulative Total Return* 2018 2019 2020 2021 2022 2023 United Community Banks, Inc. $ 100 $ 147 $ 141 $ 182 $ 176 $ 157 Nasdaq Stock Market (U.S.) Index 100 135 194 236 158 226 Nasdaq Bank Index 100 121 108 151 124 115 KBW Nasdaq Regional Banking Index 100 120 106 141 128 123 * Assumes $100 invested on December 31, 2018 in our common stock and above noted indexes.
Cumulative Total Return* 2019 2020 2021 2022 2023 2024 United Community Banks, Inc. $ 100 $ 95 $ 123 $ 119 $ 107 $ 122 NYSE Index 100 104 123 109 121 137 Nasdaq Stock Market (U.S.) Index 100 144 174 117 167 215 KBW Nasdaq Regional Banking Index 100 88 117 106 102 112 * Assumes $100 invested on December 31, 2019 in our common stock and above noted indexes.
Repurchased shares will become treasury shares and may be utilized for general corporate purposes. 39 Performance Graph. Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our common stock against the cumulative total return on the Nasdaq Stock Market (U.S.
Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our common stock against the cumulative total return on the Nasdaq Stock Market (U.S. Companies) Index, the NYSE Index and the KBW Nasdaq Regional Banking Index for the five-year period commencing December 31, 2019 and ending on December 31, 2024.
Removed
Preferred Stock Depositary Share Repurchases (Dollars in thousands, except for per share amounts) Total Number of Depositary Shares Purchased Average Price Paid per Depositary Share Total Number of Depositary Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2023 - October 31, 2023 83,670 $ 21.97 83,670 $ 17,850 November 1, 2023 - November 30, 2023 — — — 18,400 December 1, 2023 - December 31, 2023 — — — 18,400 Total 83,670 $ 21.97 83,670 In May 2023, our Board approved a preferred stock repurchase program, authorizing the repurchase up to $25.0 million of our outstanding Series I Non-Cumulative Preferred Stock directly or through the repurchase of depositary shares representing 1/1000th of a share of Series I Non-Cumulative Preferred Stock through December 31, 2023.
Added
ITEM 5. MARKET FOR UNITED’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock. Effective August 6, 2024, United transferred the listing of its securities to the NYSE. Our common shares now trade under the symbol “UCB” and our preferred Series I depositary shares trade under the symbol UCB PRI.
Removed
In November 2023, our Board approved an extension of this program, authorizing the repurchase of up to $18.4 million of shares. The extended repurchase authorization will expire on December 31, 2024. In November 2023, our Board re-authorized the existing common stock repurchase plan to allow the repurchase of up to $50 million of our common stock.
Added
Securities Authorized for Issuance under Equity Compensation Plans. See Part III, Item 12 for information relating to compensation plans under which United’s equity securities are authorized for issuance. 38 Share Repurchases .
Removed
The program is scheduled to expire on the earlier of the repurchase of our common stock having an aggregate purchase price of $50 million or December 31, 2024.
Added
This year, we added the NYSE Index to the performance graph below because we transferred the listing of our securities from the Nasdaq Global Select Market to the NYSE during the year. We intend to omit the Nasdaq Stock Market (U.S.) Index from the performance graph in future years.
Removed
Under both programs, shares may be repurchased in open market transactions at prevailing market prices or in privately negotiated transactions, from time to time, or by other means in accordance with federal securities laws, and the program may be suspended or discontinued at any time without notice.
Removed
The actual timing, number and value of shares repurchased under the programs will be determined by management at its discretion and will depend on a number of factors, including the market price of our stock, general market and economic conditions, and applicable legal requirements.
Removed
Companies) Index, the Nasdaq Bank Index and the KBW Nasdaq Regional Banking Index for the five-year period commencing December 31, 2018 and ending on December 31, 2023.
Removed
In 2023, we added the KBW Nasdaq Regional Banking Index to the performance graph below as it is comprised of banks more representative of our size and business composition compared to those in the Nasdaq Bank Index.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 65 Management’s Report on Internal Control Over Financial Reporting 66 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 67 Consolidated Financial Statements and Accompanying Notes 68
Biggest changeFinancial Statements and Supplementary Data 66 Management’s Report on Internal Control Over Financial Reporting 67 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 68 Consolidated Financial Statements and Accompanying Notes 69
Item 6. Reserved 40 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 64 Item 8.
Item 6. Reserved 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 65 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

109 edited+86 added−62 removed43 unchanged
Biggest changeTable 1 (Continued) - Non-GAAP Performance Measures Reconciliation Selected Financial Information For the Years Ended December 31, (in thousands, except per share data) 2023 2022 2021 Net income reconciliation Net income (GAAP) $ 187,544 $ 277,472 $ 269,801 Bond portfolio restructuring loss 51,689 — — FDIC special assessment 9,995 — — Merger-related and other charges 27,210 19,375 13,970 Income tax benefit of non-operating items (21,489) (4,246) (3,174) Net income - operating $ 254,949 $ 292,601 $ 280,597 Diluted income per common share reconciliation Diluted income per common share (GAAP) $ 1.54 $ 2.52 $ 2.97 Bond portfolio restructuring loss 0.33 — — FDIC special assessment 0.06 — — Merger-related and other charges 0.18 0.14 0.12 Diluted income per common share - operating $ 2.11 $ 2.66 $ 3.09 Book value per common share reconciliation Book value per common share (GAAP) $ 26.52 $ 24.38 $ 23.63 Effect of goodwill and other intangibles (8.13) (7.25) (5.21) Tangible book value per common share $ 18.39 $ 17.13 $ 18.42 Return on tangible common equity reconciliation Return on common equity (GAAP) 5.34 % 9.54 % 13.14 % Bond portfolio restructuring loss 1.15 — — FDIC special assessment 0.22 — — Merger-related and other charges 0.62 0.53 0.54 Return on common equity - operating 7.33 10.07 13.68 Effect of goodwill and other intangibles 3.30 3.97 3.65 Return on tangible common equity - operating 10.63 % 14.04 % 17.33 % Return on assets reconciliation Return on assets (GAAP) 0.68 % 1.13 % 1.37 % Bond portfolio restructuring loss 0.15 — — FDIC special assessment 0.03 — — Merger-related and other charges 0.08 0.06 0.05 Return on assets - operating 0.94 % 1.19 % 1.42 % Efficiency ratio reconciliation Efficiency ratio (GAAP) 60.09 % 52.31 % 55.80 % FDIC special assessment (1.05) — — Merger-related and other charges (2.87) (2.15) (1.97) Efficiency ratio - operating 56.17 % 50.16 % 53.83 % Tangible common equity to tangible assets reconciliation Equity to assets (GAAP) 11.95 % 11.25 % 10.61 % Effect of goodwill and other intangibles (3.27) (2.97) (2.06) Effect of preferred equity (0.32) (0.40) (0.46) Tangible common equity to tangible assets 8.36 % 7.88 % 8.09 % 46 Net Interest Revenue Net interest revenue, which is the difference between the interest earned on assets and the interest paid on deposits and borrowed funds, is the single largest component of revenue.
Biggest changeTable 1 (Continued) - Non-GAAP Performance Measures Reconciliation Selected Financial Information For the Years Ended December 31, (dollars in thousands, except per share data) 2024 2023 2022 Return on assets reconciliation Return on assets (GAAP) 0.90 % 0.68 % 1.13 % Loss on sale of manufactured housing loans 0.08 — — Bond portfolio restructuring loss — 0.15 — Gain on lease termination (0.01) — — Loss on FinTrust (goodwill impairment) 0.02 — — FDIC special assessment 0.01 0.03 — Merger-related and other charges 0.02 0.08 0.06 Return on assets - operating 1.02 % 0.94 % 1.19 % Efficiency ratio reconciliation Efficiency ratio (GAAP) 60.24 % 60.09 % 52.31 % Loss on sale of manufactured housing loans (1.63) — — Gain on lease termination 0.15 — — Loss on FinTrust (goodwill impairment) (0.53) — — FDIC special assessment (0.18) (1.05) — Merger-related and other charges (0.90) (2.87) (2.15) Efficiency ratio - operating 57.15 % 56.17 % 50.16 % Tangible common equity to tangible assets reconciliation Equity to total assets (GAAP) 12.38 % 11.95 % 11.25 % Effect of goodwill and other intangibles (3.09) (3.27) (2.97) Effect of preferred equity (0.32) (0.32) (0.40) Tangible common equity to tangible assets 8.97 % 8.36 % 7.88 % 46 Net Interest Revenue Net interest revenue, which is the difference between the interest earned on assets and the interest paid on deposits and borrowed funds, is the single largest component of revenue.
Investment Securities The composition of our investment securities portfolio reflects our investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of revenue.
Investment Securities The composition of the investment securities portfolio reflects our investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of revenue.
We have identified the determination of our 42 ACL and fair value measurements to be the accounting areas that require the most subjective or complex judgments, estimates and assumptions, and where changes in those judgments, estimates and assumptions (based on new or additional information, changes in the economic climate and/or market interest rates, etc.) could have a significant effect on our financial statements.
We have identified the determination of our ACL and fair value measurements to be the accounting areas that require the most subjective or complex judgments, estimates and assumptions, and where changes in those judgments, estimates and assumptions (based on new or additional information, changes in the economic climate and/or market interest rates, etc.) could have a significant effect on our financial statements.
In a rising rate environment, the opposite may occur. Prepayments tend to slow and the weighted average life extends. This is referred to as extension risk, which can lead to lower levels of liquidity due to the delay of cash receipts, and can result in the holding of a below market yielding asset for a longer period of time.
In a rising rate environment, the opposite may occur. Prepayments tend to slow and the weighted average 58 life extends. This is referred to as extension risk, which can lead to lower levels of liquidity due to the delay of cash receipts and can result in the holding of a below market yielding asset for a longer period of time.
The fair values of derivative financial instruments are determined based on quoted market prices, dealer quotes and internal pricing models that are 43 primarily sensitive to market observable data. However, we do evaluate the level of these observable inputs and there are some instances where we have determined that the inputs are not directly observable.
The fair values of derivative financial instruments are determined based on quoted market prices, dealer quotes and internal pricing models that are primarily sensitive to market observable data. However, we do evaluate the level of these observable inputs and there are some instances where we have determined that the inputs are not directly observable.
The change in mortgage income is strongly tied to the interest rate environment and industry conditions. We recognize the majority of income on mortgages when customers enter into mortgage rate lock commitments, making our mortgage rate lock volume a significant driver of mortgage gains in any given period.
The change in mortgage income is strongly tied to the interest rate environment and industry conditions. We recognize the majority of income on mortgages 50 when customers enter into mortgage rate lock commitments, making our mortgage rate lock volume a significant driver of mortgage gains in any given period.
Our management believes the effect of inflation on financial results depends on our ability to react to changes in interest rates and, by such reaction, reduce the inflationary effect on performance. We have an asset/liability management program to monitor and manage 63 our interest rate sensitivity position.
Our management believes the effect of inflation on financial results depends on our ability to react to changes in interest rates and, by such reaction, reduce the inflationary effect on performance. We have an asset/liability management program to monitor and manage our interest rate sensitivity position.
As of December 31, 2023 and 2022, both United and the Bank were characterized as “well-capitalized”. Effect of Inflation and Changing Prices A bank’s asset and liability structure is substantially different from that of an industrial firm, because primarily all assets and liabilities of a bank are monetary in nature, with relatively little investment in fixed assets or inventories.
As of December 31, 2024 and 2023, both United and the Bank were characterized as “well-capitalized”. Effect of Inflation and Changing Prices A bank’s asset and liability structure is substantially different from that of an industrial firm, because primarily all assets and liabilities of a bank are monetary in nature, with relatively little investment in fixed assets or inventories.
See Note 15 “Fair Value Measurements” in the consolidated financial statements herein for additional disclosures regarding the fair value of our assets and liabilities, including a description of the fair value hierarchy. The fair values for AFS and HTM securities are generally based upon quoted market prices or observable market prices for similar instruments.
See Note 14 “Fair Value Measurements” in the consolidated financial statements herein for additional disclosures regarding the fair value of our assets and liabilities, including a description of the fair value hierarchy. The fair values for AFS and HTM securities are generally based upon quoted market prices or observable market prices for similar instruments.
Although management believes its processes for determining the fair value of collateral-dependent loans are appropriate, the processes require management judgment and assumptions and the value of such assets at the time they are revalued or divested may be significantly different from management’s determination of fair value. 44 UNITED COMMUNITY BANKS, INC.
Although management believes its processes for determining the fair value of collateral-dependent loans are appropriate, the processes require management judgment and assumptions and the value of such assets at the time they are revalued or divested may be significantly different from management’s determination of fair value. 43 UNITED COMMUNITY BANKS, INC.
In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs.
In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs. 64
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes. The discussion of the components of our results of operations focuses on financial trends and events occurring between 2022 and 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes. The discussion of the components of our results of operations focuses on financial trends and events occurring between 2023 and 2024.
See Table 7 of MD&A for further detail on noninterest expense. Critical Accounting Estimates Our accounting and reporting policies are in accordance with GAAP and conform to general practices within the banking industry. Application of these principles requires management to make estimates, assumptions or judgments that affect the amounts reported in the financial statements and the accompanying notes.
See Table 8 of MD&A for further detail on noninterest expense. 41 Critical Accounting Estimates Our accounting and reporting policies are in accordance with GAAP and conform to general practices within the banking industry. Application of these principles requires management to make estimates, assumptions or judgments that affect the amounts reported in the financial statements and the accompanying notes.
We also had level 3 derivative liabilities totaling $11.2 million. From time to time, we may record assets at fair value on a nonrecurring basis, usually as a result of the write-downs of individual assets due to impairment. In particular, nonaccrual loans may be carried at the fair value of collateral if repayment is expected solely from the collateral.
We also had level 3 derivative liabilities totaling $12.3 million. From time to time, we may record assets at fair value on a nonrecurring basis, usually as a result of the write-downs of individual assets due to impairment. In particular, nonaccrual loans may be carried at the fair value of collateral if repayment is expected solely from the collateral.
In the opinion of management, our liquidity position at December 31, 2023 was sufficient to meet our expected cash requirements. Contractual Obligations and Other Commitments The following discussion provides an overview of our significant contractual obligations and other commitments.
In the opinion of management, our liquidity position at December 31, 2024 was sufficient to meet our expected cash requirements. Contractual Obligations and Other Commitments The following discussion provides an overview of our significant contractual obligations and other commitments.
The Bank’s main source of liquidity is customer interest-bearing and noninterest-bearing deposit accounts, which we are able to attract by competing more aggressively on pricing. Liquidity is also available from wholesale funding sources consisting primarily of Federal funds purchased, securities sold under agreements to repurchase, FHLB advances and brokered deposits.
The Bank’s main source of liquidity is customer deposit accounts, which we are able to attract by competing more aggressively on pricing. Liquidity is also available from wholesale funding sources consisting primarily of Federal funds purchased, securities sold under agreements to repurchase, FHLB advances and brokered deposits.
For additional information related to financial trends between 2022 and 2021 please see the information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 24, 2023, which information under that caption is incorporated herein by this reference.
For additional information related to financial trends between 2023 and 2022, please see the information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 23, 2024, which information under that caption is incorporated herein by this reference.
Provision for Credit Losses The ACL represents management’s estimate of life of loan credit losses in the loan portfolio and unfunded loan commitments. Management’s estimate of credit losses under CECL is determined using a model that relies on reasonable and supportable forecasts and historical loss information to determine the balance of the ACL and resulting provision for credit losses.
Provision for Credit Losses The ACL represents management’s estimate of life of loan credit losses in the loan portfolio and unfunded loan commitments. Management’s estimate of credit losses is determined using our CECL model that relies on reasonable and supportable forecasts and historical loss information to determine the balance of the ACL and resulting provision for credit losses.
For more information, see “GAAP Reconciliation and Explanation” in the MD&A section of this Report. 45 UNITED COMMUNITY BANKS, INC .
For more information, see “GAAP Reconciliation and Explanation” in the MD&A section of this Report. 44 UNITED COMMUNITY BANKS, INC.
At December 31, 2023, the percentage of our total assets measured at fair value on a recurring basis was 13%, the majority of which are based on either quoted market prices or market prices for similar instruments.
At December 31, 2024, the percentage of our total assets measured at fair value on a recurring basis was 17%, the majority of which are based on either quoted market prices or market prices for similar instruments.
In 2023 and 2022, the Bank paid dividends of $198 million and $133 million, respectively, to the Holding Company. Holding Company liquidity is managed to a minimum of 15-months of positive cash flow after considering all of its liquidity needs over this period. Significant uses and sources of cash during the year ended December 31, 2023 are summarized below.
In 2024 and 2023, the Bank paid dividends of $153 million and $198 million, respectively, to the Holding Company where liquidity is managed to a minimum of 15-months of positive cash flow after considering all of its liquidity needs over this period. 61 Significant uses and sources of cash during the year ended December 31, 2024 are summarized below.
Management evaluates goodwill annually, or more frequently if necessary, to determine if any impairment exists. At December 31, 2023 and December 31, 2022, the net carrying amount of goodwill was $920 million and $751 million, respectively.
Management evaluates goodwill annually, or more frequently if necessary, to determine if any impairment exists. At December 31, 2024 and December 31, 2023, the net carrying amount of goodwill was $907 million and $920 million, respectively.
See the consolidated statement of cash flows in this Report for further detail. • Net cash provided by operating activities of $294 million reflects net income of $188 million adjusted for non-cash transactions, gains and losses on sales of other loans and securities and changes in other assets and liabilities.
See the consolidated statement of cash flows in this Report for further detail. • Net cash provided by operating activities of $350 million reflects net income of $252 million adjusted for non-cash transactions, net losses on sales of other loans and securities and changes in other assets and liabilities.
Operating performance measures include “net income – operating,” “diluted net income per common share – operating,” “return on common equity – operating,” “return on tangible common equity – operating,” “return on assets – operating” and “efficiency ratio – operating.” Management has developed internal processes and procedures to accurately capture and account for merger-related and other charges and those charges are reviewed with the Audit Committee of our Board each quarter.
Operating performance measures include “noninterest income - operating”, “noninterest expenses - operating”, “net income – operating,” “diluted income per common share – operating,” “return on common equity – operating,” “return on tangible common equity – operating,”, “tangible book value per common share”, “return on assets – operating”, “efficiency ratio – operating” and “tangible common equity to tangible assets.” Management has developed internal processes and procedures to accurately capture and account for merger-related and other charges and those charges are reviewed with the Audit Committee of our Board each quarter.
Table 16 - Contractual Maturity and Weighted-Average Yield of AFS and HTM Debt Securities As of December 31, 2023 (in thousands) Maturity By Years 1 or Less 1 to 5 6 to 10 Over 10 Total Amortized Cost WA Yield Amortized Cost WA Yield Amortized Cost WA Yield Amortized Cost WA Yield Amortized Cost WA Yield AFS U.S.
Table 17 - Contractual Maturity and Weighted-Average Yield of AFS and HTM Debt Securities As of December 31, 2024 (dollars in thousands) Maturity By Years 1 or Less 1 to 5 6 to 10 Over 10 Total Amortized Cost WA Yield Amortized Cost WA Yield Amortized Cost WA Yield Amortized Cost WA Yield Amortized Cost WA Yield AFS U.S.
An important part of the Bank’s liquidity resides in the asset portion of the balance sheet, which provides liquidity primarily through loan interest and principal repayments and the maturities and sales of securities, as well as the ability to use these assets as collateral for borrowings on a secured basis.
An important part of the Bank’s liquidity resides in the asset portion of the balance sheet, which provides liquidity primarily through loan interest and principal repayments and the maturities and sales of securities, as well as the ability to use these assets as collateral for borrowings on a secured basis. Liquidity is also available from cash and cash equivalents.
We recorded a provision for credit losses of $89.4 million in 2023, compared to $63.9 million in 2022. The amount of provision recorded in each period was the amount required such that the total ACL reflected the appropriate balance as determined by management reflecting expected life of loan losses.
We recorded a provision for credit losses of $51.0 million in 2024, compared to $89.4 million in 2023. The amount of provision recorded in each period was the amount required such that the total ACL reflected the appropriate balance as determined by management reflecting expected life of loan losses.
We acquired $1.02 billion of assets and assumed $931 million of liabilities in the acquisition, which included $577 million in loans and $865 million in deposits.
We acquired $1.02 billion of assets, including goodwill, and assumed $930 million of liabilities in the acquisition, which included $577 million in loans and $865 million in deposits.
Table 15 - Investment Securities Portfolio Composition As of December 31, 2023 Mortgage-backed securities, which include both U.S. government sponsored agency and non-agency securities, make up the largest portion of our investment securities portfolio. These securities rely on the underlying pools of mortgage loans to provide a cash flow of principal and interest.
Mortgage-backed securities, which include both U.S. government sponsored agency and non-agency securities, make up the largest portion of our investment securities portfolio. These securities rely on the underlying pools of mortgage loans to provide a cash flow of principal and interest.
As of December 31, 2023, for certain of these investments, we had committed to fund an additional $11.3 million related to future capital calls that has not been reflected in the consolidated balance sheet.
As of December 31, 2024, for certain of these investments, we had committed to fund an additional $27.7 million related to future capital calls that has not been reflected in the consolidated balance sheet.
Overview We offer a wide array of commercial and consumer banking services and investment advisory services, which as of December 31, 2023, was comprised of a 207 branch network located throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama. Our equipment finance and SBA/USDA lending businesses operate throughout the United States.
Overview We offer a wide array of commercial and consumer banking services and investment advisory services, which as of December 31, 2024, was comprised of 199 banking offices throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama. Our equipment finance and SBA/USDA lending businesses operate throughout the United States.
The Holding Company currently has internal capital resources to meet these obligations. While the Holding Company has access to the capital markets, the ultimate sources of its liquidity are subsidiary service fees and dividends from the Bank, which are limited by applicable law and regulations.
While the Holding Company has access to the capital markets, the ultimate sources of its liquidity are subsidiary service fees and dividends from the Bank, which are limited by applicable law and regulations.
For qualifying leases with a term exceeding one year, we record a lease liability and ROU asset on our balance sheet. As of December 31, 2023, the lease liability and ROU asset totaled $44.1 million and $42.8 million, respectively, compared to $41.7 million and $40.0 million, respectively, at December 31, 2022.
For qualifying leases with a term exceeding one year, we record a lease liability and ROU asset on our balance sheet. As of December 31, 2024, the lease liability and ROU asset totaled $45.2 million and $42.8 million, respectively, compared to $44.1 million and $42.8 million, respectively, at December 31, 2023.
The decreases in the interest rate spread and margin reflect a steeper increase in rates paid on deposits compared to rates earned on loans, partially mitigated by higher purchased loan accretion and gains on fair value hedges of our AFS portfolio.
The decreases in the interest rate spread and margin reflect a steeper increase in rates paid on deposits compared to rates earned on loans, partially mitigated by gains on fair value hedges of certain of our loans and AFS securities.
The investment securities portfolio also provides a balance to interest rate risk in other categories of the balance sheet, while providing a vehicle for the investment of available funds, furnishing liquidity, and supplying securities to pledge as required collateral for certain deposits and borrowings. The following table presents a summary of our investment securities portfolio as of the dates indicated.
The investment securities portfolio also provides a balance to interest rate risk and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds, furnishing liquidity, and supplying securities to pledge as required collateral for certain deposits and borrowings.
Additional discussion on credit quality and the ACL is included in the “Asset Quality and Risk Elements” and “Critical Accounting Estimates” sections of this Report, as well as Note 1 to the consolidated financial statements. 49 Noninterest Income The following table presents the components of noninterest income for the periods indicated.
See Table 13 Net Charge-offs in MD&A for further detail. Additional discussion on credit quality and the ACL is included in the “Asset Quality and Risk Elements” and “Critical Accounting Estimates” sections of this Report, as well as Note 1 to the consolidated financial statements. Noninterest Income The following table presents the components of noninterest income for the periods indicated.
(consolidated) United Community Bank Minimum Capital Well-Capitalized Minimum Capital Plus Capital Conservation Buffer 2023 2022 2023 2022 Risk-based ratios: CET1 capital 4.5 % 6.5 % 7.0 % 12.16 % 12.26 % 12.22 % 12.83 % Tier 1 capital 6.0 8.0 8.5 12.60 12.81 12.22 12.83 Total capital 8.0 10.0 10.5 14.49 14.79 13.23 13.70 Leverage ratio 4.0 5.0 N/A 9.47 9.69 9.17 9.69 Additional information related to capital ratios, as calculated under regulatory guidelines, is provided in Note 22 to the consolidated financial statements.
(consolidated) United Community Bank Minimum Capital Well-Capitalized Minimum Capital Plus Capital Conservation Buffer 2024 2023 2024 2023 Risk-based ratios: CET1 capital 4.5 % 6.5 % 7.0 % 13.27 % 12.16 % 13.05 % 12.22 % Tier 1 capital 6.0 8.0 8.5 13.72 12.60 13.05 12.22 Total capital 8.0 10.0 10.5 15.17 14.49 14.08 13.23 Leverage ratio 4.0 5.0 N/A 9.96 9.47 9.46 9.17 Additional information related to capital ratios, as calculated under regulatory guidelines, is provided in Note 21 to the consolidated financial statements.
In addition to the reviews mentioned above, an independent loan review team reviews the portfolio to ensure consistent application of risk rating policies and procedures. The ACL reflects management’s assessment of the life of loan expected credit losses in the loan portfolio and unfunded loan commitments. This assessment involves uncertainty and judgment and is subject to change in future periods.
In addition to the reviews mentioned above, an independent loan review team reviews the portfolio to ensure consistent application of credit and risk rating policies and procedures. The ACL reflects management’s assessment of the life of loan expected credit losses in the loan portfolio and unfunded loan commitments.
We also have core deposit and customer relationship intangible assets, representing the value of acquired deposit and customer relationships, respectively, which are amortizing intangible assets. Amortizing intangible assets are required to be tested for impairment only when events or circumstances indicate that impairment may exist.
In addition to goodwill, we have core deposit intangible assets, and through most of 2024, we also had customer relationship intangible assets. These represent the value of acquired deposit and customer relationships, respectively, which are amortizing intangible assets. Amortizing intangible assets are required to be tested for impairment only when events or circumstances indicate that impairment may exist.
The following discussion of the major components of our balance sheet highlights significant activity resulting in the change in our financial condition between December 31, 2022 and December 31, 2023. Loans Our loan portfolio is our largest category of interest-earning assets.
Shareholders’ equity totaled $3.43 billion and $3.26 billion at December 31, 2024 and 2023, respectively. The following discussion of the major components of our balance sheet highlights significant activity resulting in the change in our financial condition between December 31, 2023 and December 31, 2024. Loans Our loan portfolio is our largest category of interest-earning assets.
Long-term Debt At December 31, 2023 and 2022, we had long-term debt outstanding of $325 million, which included senior debentures, subordinated debentures, and trust preferred securities. The following table provides long-term debt outstanding by maturity in five year increments.
Long-term Debt At December 31, 2024 and 2023, we had long-term debt outstanding of $254 million and $325 million, respectively, consisting of senior debentures, subordinated debentures, and trust preferred securities, all of which were obligations of the Holding Company. The following table provides long-term debt outstanding by maturity in five-year increments.
Table 1 Selected Financial Information For the Years Ended December 31, (in thousands, except per share data) 2023 2022 2021 INCOME SUMMARY Interest revenue $ 1,237,107 $ 813,155 $ 578,794 Interest expense 419,342 60,798 29,760 Net interest revenue 817,765 752,357 549,034 Provision for credit losses 89,430 63,913 (37,550) Noninterest income 75,483 137,707 157,818 Total revenue 803,818 826,151 744,402 Noninterest expenses 571,273 470,149 396,639 Income before income tax expense 232,545 356,002 347,763 Income tax expense 45,001 78,530 77,962 Net income 187,544 277,472 269,801 Non-operating items 88,894 19,375 13,970 Income tax benefit of non-operating items (21,489) (4,246) (3,174) Net income - operating (1)* $ 254,949 $ 292,601 $ 280,597 PERFORMANCE MEASURES Per common share: Diluted net income - GAAP $ 1.54 $ 2.52 $ 2.97 Diluted net income - operating (1)* 2.11 2.66 3.09 Common stock cash dividends declared 0.92 0.86 0.78 Book value 26.52 24.38 23.63 Tangible book value (3)* 18.39 17.13 18.42 Key Performance Ratios: Return on common equity - GAAP (2) 5.34 % 9.54 % 13.14 % Return on common equity - operating (1)(2)* 7.33 10.07 13.68 Return on tangible common equity - operating (1)(2)(3)* 10.63 14.04 17.33 Return on assets - GAAP 0.68 1.13 1.37 Return on assets - operating (1)* 0.94 1.19 1.42 Net interest margin (FTE) 3.35 3.38 3.07 Efficiency ratio - GAAP 60.09 52.31 55.80 Efficiency ratio - operating (1)* 56.17 50.16 53.83 Equity to total assets 11.95 11.25 10.61 Tangible common equity to tangible assets (3)* 8.36 7.88 8.09 ASSET QUALITY Total NPAs $ 92,877 $ 44,281 $ 32,855 ACL - loans 208,071 159,357 102,532 Net charge-offs 52,243 9,654 38 ACL - loans to loans 1.14 % 1.04 % 0.87 % Net charge-offs to average loans 0.30 0.07 — NPAs to total assets 0.34 0.18 0.16 AT PERIOD END ($ in millions) Loans $ 18,319 $ 15,335 $ 11,760 Investment securities 5,822 6,228 5,653 Total assets 27,297 24,009 20,947 Deposits 23,311 19,877 18,241 Shareholders’ equity 3,262 2,701 2,222 Common shares outstanding (thousands) 119,010 106,223 89,350 (1) Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on next page .
Table 1 Selected Financial Information For the Years Ended December 31, (dollars in thousands, except per share data) 2024 2023 2022 INCOME SUMMARY Interest revenue $ 1,377,741 $ 1,237,107 $ 813,155 Interest expense 550,373 419,342 60,798 Net interest revenue 827,368 817,765 752,357 Provision for credit losses 50,951 89,430 63,913 Noninterest income 124,756 75,483 137,707 Total revenue 901,173 803,818 826,151 Noninterest expenses 578,167 571,273 470,149 Income before income tax expense 323,006 232,545 356,002 Income tax expense 70,609 45,001 78,530 Net income 252,397 187,544 277,472 Non-operating items 40,268 88,894 19,375 Income tax benefit of non-operating items (8,702) (21,489) (4,246) Net income - operating (1)* $ 283,963 $ 254,949 $ 292,601 PERFORMANCE MEASURES Per common share: Diluted net income - GAAP $ 2.04 $ 1.54 $ 2.52 Diluted net income - operating (1)* 2.30 2.11 2.66 Common stock cash dividends declared 0.94 0.92 0.86 Book value 27.87 26.52 24.38 Tangible book value (3)* 20.00 18.39 17.13 Key Performance Ratios: Return on common equity - GAAP (2) 7.07 % 5.34 % 9.54 % Return on common equity - operating (1)(2)* 7.97 7.33 10.07 Return on tangible common equity - operating (1)(2)(3)* 11.42 10.63 14.04 Return on assets - GAAP 0.90 0.68 1.13 Return on assets - operating (1)* 1.02 0.94 1.19 Net interest margin (FTE) 3.29 3.35 3.38 Efficiency ratio - GAAP 60.24 60.09 52.31 Efficiency ratio - operating (1)* 57.15 56.17 50.16 Equity to total assets 12.38 11.95 11.25 Tangible common equity to tangible assets (3)* 8.97 8.36 7.88 ASSET QUALITY Total NPAs $ 115,635 $ 92,877 $ 44,281 ACL - loans 206,998 208,071 159,357 Net charge-offs 57,690 52,243 9,654 ACL - loans to loans 1.14 % 1.14 % 1.04 % Net charge-offs to average loans 0.32 0.30 0.07 NPAs to total assets 0.42 0.34 0.18 AT PERIOD END ($ in millions) Loans $ 18,176 $ 18,319 $ 15,335 Investment securities 6,804 5,822 6,228 Total assets 27,720 27,297 24,009 Deposits 23,461 23,311 19,877 Shareholders’ equity 3,432 3,262 2,701 Common shares outstanding (thousands) 119,364 119,010 106,223 (1) Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on next page .
During the fourth quarter of 2023, we ceased originating new manufactured housing loans. Asset Quality and Risk Elements We manage asset quality and control credit risk through review and oversight of the loan portfolio as well as adherence to policies designed to promote sound underwriting and loan monitoring practices.
Asset Quality and Risk Elements We manage asset quality and control credit risk through review and oversight of the loan portfolio as well as adherence to policies designed to promote sound underwriting and loan monitoring practices.
These increases were partially offset by dividends on common and preferred stock of $116 million. Under the risk-based capital guidelines of Basel III, assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral.
Under the risk-based capital guidelines of Basel III, assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of the collateral.
Letters of credit and financial guarantees are conditional commitments issued to guarantee a customer’s performance to a third party and have essentially the same credit risk as extending loan facilities to customers. Those commitments are primarily issued to local businesses.
Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Letters of credit and financial guarantees are conditional commitments issued to guarantee a customer’s performance to a third party and have essentially the same credit risk as extending loan facilities to customers. Those commitments are primarily issued to local businesses.
As of December 31, 2023, our 25 largest credit relationships consisted of loans and loan commitments ranging from $38.9 million to $81.6 million, with an aggregate total credit exposure of $1.16 billion, including $332 million in unfunded commitments and $832 million in balances outstanding, excluding participations sold.
As of December 31, 2023, our 25 largest credit relationships consisted of loans and loan commitments ranging from $38.9 million to $81.6 million, with an aggregate total credit exposure of $1.16 billion, including $332 million in unfunded commitments and $832 million in balances outstanding, excluding participations sold. 54 The following table sets forth the maturity distribution of our loan portfolio, including the interest rate sensitivity for loans maturing after one year.
Table 11 - Allocation of ACL As of December 31, (in thousands) 2023 2022 2021 ACL % of loans in each category to total loans ACL % of loans in each category to total loans ACL % of loans in each category to total loans Owner occupied commercial real estate $ 23,542 18 $ 19,834 18 $ 14,282 20 Income producing commercial real estate 47,755 23 32,082 21 24,156 22 Commercial & industrial 30,890 13 23,504 15 16,592 16 Commercial construction 21,741 10 20,120 10 9,956 9 Equipment financing 33,383 9 23,395 9 16,290 9 Total commercial 157,311 73 118,935 73 81,276 76 Residential mortgage 28,219 17 20,809 15 12,390 14 Home equity 9,647 5 8,707 6 6,568 6 Residential construction 1,833 2 2,049 3 1,847 3 Manufactured housing 10,339 2 8,098 2 — — Consumer 722 1 759 1 451 1 Total ACL - loans 208,071 100 159,357 100 102,532 100 ACL - unfunded commitments 16,057 21,163 10,992 Total ACL $ 224,128 $ 180,520 $ 113,524 ACL- loans as a percentage of total loans 1.14 % 1.04 % 0.87 % The following table summarizes net charge-offs to average loans for each of the past three years.
Table 12 - Allocation of ACL As of December 31, (dollars in thousands) 2024 2023 2022 ACL % of loans in each category to total loans ACL % of loans in each category to total loans ACL % of loans in each category to total loans Owner occupied CRE $ 19,873 19 $ 23,542 18 $ 19,834 18 Income producing CRE 41,427 24 47,755 23 32,082 21 Commercial & industrial 35,441 13 30,890 13 23,504 15 Commercial construction 16,370 9 21,741 10 20,120 10 Equipment financing 47,415 9 33,383 9 23,395 9 Total commercial 160,526 74 157,311 73 118,935 73 Residential mortgage 32,259 18 28,219 17 20,809 15 Home equity 11,247 6 9,647 5 8,707 6 Residential construction 1,672 1 1,833 2 2,049 3 Manufactured housing 450 — 10,339 2 8,098 2 Consumer 844 1 722 1 759 1 Total ACL - loans 206,998 100 208,071 100 159,357 100 ACL - unfunded commitments 10,391 16,057 21,163 Total ACL $ 217,389 $ 224,128 $ 180,520 ACL- loans as a percentage of total loans 1.14 % 1.14 % 1.04 % The following table summarizes net charge-offs to average loans for each of the past three years.
To the extent actual outcomes are worse than management estimates, additional provision for credit losses could be required that could adversely affect our earnings or financial position in future periods.
To the extent actual outcomes are worse than management estimates, additional provision for credit losses could be required that could adversely affect our earnings or financial position in future periods. One of the most significant estimates and judgments influencing the results of the ACL calculation is the macroeconomic forecast.
Rate Assets: Interest-earning assets: Loans, net of unearned income (FTE) (1)(2) $ 17,576,424 $ 1,042,578 5.93 % $ 14,571,746 $ 673,491 4.62 % $ 11,485,876 $ 504,015 4.39 % Taxable securities (3) 5,929,687 162,505 2.74 6,284,603 121,501 1.93 4,446,712 61,994 1.39 Tax-exempt securities (FTE) (1)(3) 381,731 9,796 2.57 496,327 13,865 2.79 382,915 12,059 3.15 Federal funds sold and other interest-earning assets 642,499 26,397 4.11 1,065,057 9,104 0.85 1,680,151 4,784 0.28 Total interest-earning assets (FTE) 24,530,341 1,241,276 5.06 22,417,733 817,961 3.65 17,995,654 582,852 3.24 Noninterest-earning assets: Allowance for credit losses (191,016) (135,144) (121,586) Cash and due from banks 239,574 204,852 139,728 Premises and equipment 355,139 288,044 230,276 Other assets (3) 1,517,940 1,275,263 1,013,956 Total assets $ 26,451,978 $ 24,050,748 $ 19,258,028 Liabilities and Shareholders’ Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW and interest-bearing demand $ 5,161,071 125,336 2.43 $ 4,486,263 17,312 0.39 $ 3,610,601 5,468 0.15 Money market 5,462,677 156,397 2.86 4,900,667 18,274 0.37 3,972,358 5,380 0.14 Savings deposits 1,312,469 2,866 0.22 1,482,599 693 0.05 1,095,071 217 0.02 Time deposits 3,106,989 100,973 3.25 1,693,307 5,152 0.30 1,529,072 3,663 0.24 Brokered time deposits 224,914 10,002 4.45 61,636 668 1.08 67,230 117 0.17 Total interest-bearing deposits 15,268,120 395,574 2.59 12,624,472 42,099 0.33 10,274,332 14,845 0.14 Federal funds purchased and other borrowings 75,965 3,195 4.21 13,004 507 3.90 44 — — FHLB advances 124,425 5,761 4.63 34,027 1,424 4.18 1,195 3 0.25 Long-term debt 324,753 14,812 4.56 323,102 16,768 5.19 276,492 14,912 5.39 Total borrowed funds 525,143 23,768 4.53 370,133 18,699 5.05 277,731 14,915 5.37 Total interest-bearing liabilities 15,793,263 419,342 2.66 12,994,605 60,798 0.47 10,552,063 29,760 0.28 Noninterest-bearing liabilities: Noninterest-bearing deposits 7,091,034 7,967,321 6,276,094 Other liabilities 397,337 377,221 322,566 Total liabilities 23,281,634 21,339,147 17,150,723 Shareholders’ equity 3,170,344 2,711,601 2,107,305 Total liabilities and shareholders’ equity $ 26,451,978 $ 24,050,748 $ 19,258,028 Net interest revenue (FTE) $ 821,934 $ 757,163 $ 553,092 Net interest-rate spread (FTE) 2.40 % 3.18 % 2.96 % Net interest margin (FTE) (4) 3.35 % 3.38 % 3.07 % (1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans.
Rate Assets: Interest-earning assets: Loans, net of unearned income (FTE) (1)(2) $ 18,124,179 $ 1,146,440 6.33 % $ 17,576,424 $ 1,042,578 5.93 % $ 14,571,746 $ 673,491 4.62 % Taxable securities (3) 6,172,942 199,789 3.24 5,929,687 162,505 2.74 6,284,603 121,501 1.93 Tax-exempt securities (FTE) (1)(3) 362,655 9,152 2.52 381,731 9,796 2.57 496,327 13,865 2.79 Federal funds sold and other interest-earning assets 623,426 26,652 4.28 642,499 26,397 4.11 1,065,057 9,104 0.85 Total interest-earning assets (FTE) 25,283,202 1,382,033 5.47 24,530,341 1,241,276 5.06 22,417,733 817,961 3.65 Noninterest-earning assets: Allowance for credit losses (212,968) (191,016) (135,144) Cash and due from banks 215,411 239,574 204,852 Premises and equipment 394,127 355,139 288,044 Other assets (3) 1,611,405 1,517,940 1,275,263 Total assets $ 27,291,177 $ 26,451,978 $ 24,050,748 Liabilities and Shareholders’ Equity: Interest-bearing liabilities: Interest-bearing deposits: NOW and interest-bearing demand $ 6,014,052 175,534 2.92 $ 5,161,071 125,336 2.43 $ 4,486,263 17,312 0.39 Money market 6,188,579 214,742 3.47 5,462,677 156,397 2.86 4,900,667 18,274 0.37 Savings deposits 1,146,305 2,717 0.24 1,312,469 2,866 0.22 1,482,599 693 0.05 Time deposits 3,519,461 140,229 3.98 3,106,989 100,973 3.25 1,693,307 5,152 0.30 Brokered time deposits 50,359 2,297 4.56 224,914 10,002 4.45 61,636 668 1.08 Total interest-bearing deposits 16,918,756 535,519 3.17 15,268,120 395,574 2.59 12,624,472 42,099 0.33 Federal funds purchased and other borrowings 2,468 131 5.31 75,965 3,195 4.21 13,004 507 3.90 FHLB advances 4 — — 124,425 5,761 4.63 34,027 1,424 4.18 Long-term debt 319,163 14,723 4.61 324,753 14,812 4.56 323,102 16,768 5.19 Total borrowed funds 321,635 14,854 4.62 525,143 23,768 4.53 370,133 18,699 5.05 Total interest-bearing liabilities 17,240,391 550,373 3.19 15,793,263 419,342 2.66 12,994,605 60,798 0.47 Noninterest-bearing liabilities: Noninterest-bearing deposits 6,299,019 7,091,034 7,967,321 Other liabilities 409,547 397,337 377,221 Total liabilities 23,948,957 23,281,634 21,339,147 Shareholders’ equity 3,342,220 3,170,344 2,711,601 Total liabilities and shareholders’ equity $ 27,291,177 $ 26,451,978 $ 24,050,748 Net interest revenue (FTE) $ 831,660 $ 821,934 $ 757,163 Net interest-rate spread (FTE) 2.27 % 2.40 % 3.18 % Net interest margin (FTE) (4) 3.29 % 3.35 % 3.38 % (1) Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans.
Table 20 - Long-term Debt by Maturity Category As of December 31, 2023 (in thousands) Next 5 years $ 135,000 6 - 10 years 163,093 11 - 15 years 31,239 329,332 Less discount (4,509) Total long-term debt $ 324,823 Operating Lease Obligations We are party to operating lease agreements for many of our branch locations, ATMs, loan production offices and operation centers.
Table 21 - Long-term Debt by Maturity Category As of December 31, 2024 (in thousands) Next 5 years $ 135,000 6 - 10 years 100,000 11 - 15 years 25,775 260,775 Less discount (6,623) Total long-term debt $ 254,152 Operating Lease Obligations We are party to operating lease agreements for many of our branch locations, ATMs, ITMs, loan production offices and operation centers.
Additional information on the loan portfolio and ACL can be found in the sections of MD&A titled “Asset Quality and Risk Elements” and “Nonperforming Assets.” Note 1 to the consolidated financial statements includes additional information on accounting policies related to the ACL.
It is meant for informational purposes as an approximation of a possible outcome under hypothetical downside conditions. 42 Additional information on the loan portfolio and ACL can be found in the sections of MD&A titled “Asset Quality and Risk Elements” and “Nonperforming Assets.” Note 1 to the consolidated financial statements includes additional information on accounting policies related to the ACL.
Provision expense for 2023 included $14.5 million related to the establishment of the ACL for the acquired First Miami and Progress non-PCD loans and unfunded commitments. Provision expense for 2022 included $18.3 million related to the establishment of the ACL for the acquired Reliant non-PCD loans and unfunded commitments.
Provision expense for 2023 included $14.5 million related to the establishment of the ACL for the acquired First Miami and Progress non-PCD loans and unfunded commitments and one commercial loan relationship charge-off of $19.0 million.
Table 18 - Maturities of Time Deposits Greater than $250,000 As of December 31, 2023 (in thousands) Three months or less $ 382,802 Over three through six months 308,274 Over six months through twelve months 412,776 Over one year 47,886 Total $ 1,151,738 Liquidity Management Liquidity is defined as the ability to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities.
Table 19 - Maturities of Time Deposits Greater than $250,000 As of December 31, 2024 (in thousands) Three months or less $ 570,526 Over three through six months 240,549 Over six months through twelve months 210,111 Over one year 41,694 Total $ 1,062,880 Liquidity Management Liquidity is defined as the ability to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities.
Common risks for this loan category are declines in general economic conditions, declines in real estate value, declines in occupancy rates, and lack of suitable alternative use for the property. In the current environment where inflation is high and interest rates have been rising over the past two years, the cost of renting commercial real estate has risen substantially.
Common risks for this loan category include declines in general economic conditions, declines in real estate value, declines in occupancy rates, and lack of suitable alternative use for the property. Over the past few years, the cost of renting CRE has risen substantially due to increased levels of inflation and a relatively high interest rate environment.
Table 7 - Noninterest Expenses For the Years Ended December 31, (in thousands) Change 2023 2022 2021 2023-2022 Salaries and employee benefits $ 318,464 $ 276,205 $ 241,443 15 % Occupancy 42,640 36,247 28,619 18 Communications and equipment 43,264 38,234 29,829 13 Professional fees 26,732 20,166 20,589 33 Lending and loan servicing expense 9,722 9,350 10,859 4 Outside services - electronic banking 11,577 12,583 9,481 (8) Postage, printing and supplies 9,467 8,749 7,110 8 Advertising and public relations 9,473 8,384 5,910 13 FDIC assessments and other regulatory charges 27,449 9,894 7,398 177 Amortization of intangibles 15,175 6,826 4,045 122 Merger-related and other charges 27,210 19,375 13,970 40 Other 30,100 24,136 17,386 25 Total noninterest expenses $ 571,273 $ 470,149 $ 396,639 22 Noninterest expenses for 2023 totaled $571 million, up 22% from 2022.
Table 8 - Noninterest Expenses For the Years Ended December 31, (dollars in thousands) Change 2024 2023 2022 2024-2023 Salaries and employee benefits $ 340,043 $ 318,464 $ 276,205 7 % Occupancy 44,306 42,640 36,247 4 Communications and equipment 49,249 43,264 38,234 14 Professional fees 24,732 26,732 20,166 (7) Lending and loan servicing expense 8,379 9,722 9,350 (14) Outside services - electronic banking 13,703 11,577 12,583 18 Postage, printing and supplies 9,867 9,467 8,749 4 Advertising and public relations 8,546 9,473 8,384 (10) FDIC assessments and other regulatory charges 20,978 27,449 9,894 (24) Amortization of intangibles 14,596 15,175 6,826 (4) Merger-related and other charges 8,623 27,210 19,375 (68) Other 35,145 30,100 24,136 17 Total noninterest expenses $ 578,167 $ 571,273 $ 470,149 1 Salaries and employee benefits for 2024 increased $21.6 million compared to 2023.
Unless we have determined we are reasonably likely to renew the lease, these options have been excluded from the calculation of our lease liability and ROU asset. Additional information regarding operating leases is provided in Note 14 to the consolidated financial statements.
Unless we have determined we are reasonably likely to renew the lease, these options have been excluded from the calculation of our lease liability and ROU asset.
At December 31, 2023, HTM debt securities had a fair value of $2.10 billion, indicating net unrealized losses of $395 million. Additional unrealized losses on HTM debt securities of $68.2 million (pre-tax) were included in AOCI as a result of the transfer of AFS debt securities to HTM in 2022. Unrealized losses were primarily attributable to changes in interest rates.
Additional unrealized losses on HTM debt securities of $59.5 million (pre-tax) were included in AOCI as a result of the transfer of AFS debt securities to HTM in 2022. Unrealized losses were primarily attributable to changes in interest rates.
As of December 31, 2023, we had level 3 assets, those valued using unobservable inputs, of $54.2 million. The total level 3 assets consisted of $35.9 million in residential mortgage servicing rights, $10.6 million in derivative assets, $5.44 million in servicing rights for SBA/USDA loans and $2.21 million of AFS debt securities.
As of December 31, 2024, we had level 3 assets, those valued using unobservable inputs, of $65.3 million. The total level 3 assets consisted of $39.3 million in residential mortgage servicing rights, $11.7 million in derivative assets, $7.47 million in contingent consideration receivables, $4.70 million in servicing rights for SBA/USDA loans and $2.23 million of AFS debt securities.
We believe that we have adequate sources of liquidity to fund commitments that are drawn upon by borrowers. In addition, we hold investments in certain limited partnerships for tax credit and CRA purposes.
The total amount of these instruments does not necessarily represent future cash requirements because a significant portion of these instruments expire without being used. We believe that we have adequate sources of liquidity to fund commitments that are drawn upon by borrowers. In addition, we hold investments in certain limited partnerships for tax credit and CRA purposes.
Significant non-cash transactions for the period included provision for credit losses of $89.4 million and depreciation, amortization and accretion of $45.0 million. • Net cash used in investing activities of $163 million consisted primarily of $857 million of purchases of AFS debt securities and a $997 million net increase in loans, offset by $1.66 billion proceeds from securities sales, maturities and calls and $208 million in net cash received from acquisitions. • Net cash provided by financing activities of $226 million consisted primarily of a net increase in deposits of $1.34 billion, partially offset by net repayments of FHLB advances and other short-term borrowings of $993 million and $112 million in common and preferred stock dividends.
Significant non-cash transactions for the period included provision for credit losses of $51.0 million and depreciation, amortization and accretion of $40.9 million. • Net cash used in investing activities of $991 million consisted primarily of $1.94 billion of purchases of AFS debt securities, partially offset by $992 million proceeds from securities sales, maturities and calls and, an $82.7 million net decrease in loans. • Net cash provided by financing activities of $157 million consisted primarily of a net increase in deposits of $149 million and an increase in short-term borrowings of $195 million, partially offset by $119 million in common and preferred stock dividends and repayment of long-term debt of $68.6 million.
Table 4 - Noninterest Income For the Years Ended December 31, (in thousands) Change 2023 2022 2021 2023-2022 Service charge and fees: Overdraft fees $ 11,737 $ 10,822 $ 10,137 8 % ATM and debit card interchange fees 15,431 16,132 13,737 (4) Other service charges and fees 11,244 11,209 9,994 — Total service charges and fees 38,412 38,163 33,868 1 Mortgage loan gains and related fees 19,220 32,524 58,446 (41) Wealth management fees 23,740 23,594 18,998 1 Gains from sales of other loans, net 9,146 10,730 11,267 (15) Other lending and loan servicing fees 13,973 10,005 9,427 40 Securities (losses) gains, net (53,333) (3,872) 83 Other noninterest income: Customer derivatives 2,517 2,180 3,198 15 Other investment gains (7) 2,023 4,886 BOLI 8,030 6,603 3,552 22 Treasury management income 5,064 3,758 2,910 35 Other 8,721 11,999 11,183 (27) Total other noninterest income 24,325 26,563 25,729 (8) Total noninterest income $ 75,483 $ 137,707 $ 157,818 (45) Mortgage loan gains and related fees consist primarily of fees earned on mortgage originations, gains on the sale of mortgages in the secondary market, mortgage derivative hedging gains and losses, fair value adjustments to our mortgage loans held for sale and fees earned from servicing mortgages for others, including fair value adjustments on our mortgage servicing asset.
Table 5 - Noninterest Income For the Years Ended December 31, (in thousands) Change 2024 2023 2022 2024-2023 Service charge and fees: Overdraft fees $ 13,523 $ 11,737 $ 10,822 15 % ATM and debit card interchange fees 15,563 15,431 16,132 1 Other service charges and fees 11,908 11,244 11,209 6 Total service charges and fees 40,994 38,412 38,163 7 Mortgage loan gains and related fees 27,567 19,220 32,524 43 Wealth management fees 23,695 23,740 23,594 — (Losses) gains from sales of other loans, net (21,284) 9,146 10,730 Other lending and loan servicing fees 14,396 13,973 10,005 3 Securities losses, net (3,316) (53,333) (3,872) Other noninterest income: Customer derivatives 2,304 2,517 2,180 (8) Other investment income 7,817 (7) 2,023 BOLI 9,299 8,030 6,603 16 Treasury management income 6,779 5,064 3,758 34 Other 16,505 8,721 11,999 89 Total other noninterest income 42,704 24,325 26,563 76 Total noninterest income $ 124,756 $ 75,483 $ 137,707 65 Overdraft fees for 2024 increased compared to 2023, driven by higher overdraft transaction volume.
Table 17 - Deposits As of December 31, (in thousands) 2023 2022 Balance Customer Deposit Composition Balance Customer Deposit Composition Noninterest-bearing demand $ 6,534,307 28 % $ 7,643,081 39 % NOW and interest-bearing demand 6,155,193 27 4,350,878 22 Money market and savings 6,808,394 29 5,967,017 30 Time 3,649,498 16 1,781,482 9 Total customer deposits 23,147,392 100 % 19,742,458 100 % Brokered deposits 163,219 134,049 Total deposits $ 23,310,611 $ 19,876,507 The following table sets forth the scheduled maturities of time deposits greater than $250,000.
Table 18 - Deposits As of December 31, (dollars in thousands) 2024 2023 Balance Customer Deposit Composition Balance Customer Deposit Composition Noninterest-bearing demand $ 6,211,182 27 % $ 6,534,307 28 % NOW and interest-bearing demand 6,141,342 26 6,155,193 27 Money market and savings 7,498,735 32 6,808,394 29 Time 3,441,424 15 3,649,498 16 Total customer deposits 23,292,683 100 % 23,147,392 100 % Brokered deposits 168,292 163,219 Total deposits $ 23,460,975 $ 23,310,611 60 The following table sets forth the scheduled maturities of time deposits greater than $250,000.
The amount of loans sold depends on several variables including the current lending environment and balance sheet management activities. From time to time, we also sell certain equipment financing receivables based on market conditions. The following table presents loans sold and corresponding gains recognized on SBA/USDA loans and other loans sold for the periods indicated.
The amount of loans sold depends on several variables including the current lending environment and balance sheet management activities. From time to time, we also sell certain equipment financing receivables based on market conditions. In addition, during 2024, we sold substantially all of our manufactured housing loan portfolio.
Growth in average loans for the year ended December 31, 2023 of $3.00 billion, or 21%, compared to 2022 also contributed to the increase in interest revenue. The acquisitions of Progress and First Miami contributed $1.79 billion combined to the increase in average loans.
Growth in average loans for the year ended December 31, 2024 of $548 million, or 3%, compared to 2023 also contributed to the increase in interest revenue. The growth in average loans reflects organic loan growth and average loans acquired from First Miami for the full year of 2024.
Table 3 - Change in Interest Revenue and Interest Expense (in thousands, FTE) 2023 Compared to 2022 2022 Compared to 2021 Increase (decrease) due to changes in Total Increase (decrease) due to changes in Total Volume Rate Change Volume Rate Change Interest-earning assets: Loans $ 155,447 $ 213,640 $ 369,087 $ 141,433 $ 28,043 $ 169,476 Taxable securities (7,235) 48,239 41,004 30,742 28,765 59,507 Tax-exempt securities (3,009) (1,060) (4,069) 3,280 (1,474) 1,806 Federal funds sold and other interest-earning assets (4,910) 22,203 17,293 (2,293) 6,613 4,320 Total interest-earning assets 140,293 283,022 423,315 173,162 61,947 235,109 Interest-bearing liabilities: Interest-bearing deposits: NOW and interest-bearing demand 2,985 105,039 108,024 1,604 10,240 11,844 Money market 2,332 135,791 138,123 1,517 11,377 12,894 Savings deposits (88) 2,261 2,173 98 378 476 Time deposits 7,610 88,211 95,821 423 1,066 1,489 Brokered time deposits 4,299 5,035 9,334 (11) 562 551 Total interest-bearing deposits 17,138 336,337 353,475 3,631 23,623 27,254 Federal funds purchased and other short-term borrowings 2,645 43 2,688 507 — 507 FHLB advances 4,170 167 4,337 905 516 1,421 Long-term debt 84 (2,040) (1,956) 2,437 (581) 1,856 Total borrowed funds 6,899 (1,830) 5,069 3,849 (65) 3,784 Total interest-bearing liabilities 24,037 334,507 358,544 7,480 23,558 31,038 Increase in net interest revenue $ 116,256 $ (51,485) $ 64,771 $ 165,682 $ 38,389 $ 204,071 Any variance attributable jointly to volume and rate changes is allocated to the volume and rate variance in proportion to the relationship of the absolute dollar amount of the change in each.
Table 3 - Change in Interest Revenue and Interest Expense (dollars in thousands, (FTE)) 2024 Compared to 2023 2023 Compared to 2022 Increase (decrease) due to changes in Total Increase (decrease) due to changes in Total Volume Rate Change Volume Rate Change Interest-earning assets: Loans $ 33,180 $ 70,682 $ 103,862 $ 155,447 $ 213,640 $ 369,087 Taxable securities 6,889 30,395 37,284 (7,235) 48,239 41,004 Tax-exempt securities (483) (161) (644) (3,009) (1,060) (4,069) Federal funds sold and other interest-earning assets (797) 1,052 255 (4,910) 22,203 17,293 Total interest-earning assets 38,789 101,968 140,757 140,293 283,022 423,315 Interest-bearing liabilities: Interest-bearing deposits: NOW and interest-bearing demand 22,597 27,601 50,198 2,985 105,039 108,024 Money market 22,480 35,865 58,345 2,332 135,791 138,123 Savings deposits (381) 232 (149) (88) 2,261 2,173 Time deposits 14,526 24,730 39,256 7,610 88,211 95,821 Brokered time deposits (7,956) 251 (7,705) 4,299 5,035 9,334 Total interest-bearing deposits 51,266 88,679 139,945 17,138 336,337 353,475 Federal funds purchased and other short-term borrowings (3,729) 665 (3,064) 2,645 43 2,688 FHLB advances (5,761) — (5,761) 4,170 167 4,337 Long-term debt (257) 168 (89) 84 (2,040) (1,956) Total borrowed funds (9,747) 833 (8,914) 6,899 (1,830) 5,069 Total interest-bearing liabilities 41,519 89,512 131,031 24,037 334,507 358,544 Increase in net interest revenue $ (2,730) $ 12,456 $ 9,726 $ 116,256 $ (51,485) $ 64,771 Any variance attributable jointly to volume and rate changes is allocated to the volume and rate variance in proportion to the relationship of the absolute dollar amount of the change in each.
This can increase the risk of lower occupancy rates to our borrowers. In addition, in the post-COVID era, demand for office space has seen some decline as many companies have reduced the sizes of their offices to account for hybrid and remote work arrangements.
This can increase the risk of lower occupancy rates for our borrowers. Additionally, demand for office space has declined as many companies have reduced the sizes of their offices to account for hybrid and remote work arrangements. We monitor our income producing CRE portfolio through debt covenant monitoring and performing annual review procedures.
The following tables indicate the relationship between interest revenue and expense and the average amounts of assets and liabilities, which provide further insight into net interest spread and net interest margin for the periods indicated. The following discussion provides additional detail on the average balances and net interest revenue for the years ended December 31, 2023 and 2022.
The net interest spread was 2.27% and 2.40% for 2024 and 2023, respectively, while the net interest margin was 3.29% and 3.35%, respectively. The following tables indicate the relationship between interest revenue and expense and the average amounts of assets and liabilities, which provide further insight into net interest spread and net interest margin for the periods indicated.
See Note 23 to the consolidated financial statements for additional information on off-balance sheet arrangements. Capital Resources and Dividends The maintenance and management of capital levels is one of management’s significant priorities. Shareholders’ equity at December 31, 2023 was $3.26 billion, an increase of $561 million from December 31, 2022.
Capital Resources and Dividends The maintenance and management of capital levels is one of management’s significant priorities. Shareholders’ equity at December 31, 2024 was $3.43 billion, an increase of $171 million from December 31, 2023.
Table 13 - NPAs As of December 31, (in thousands) 2023 2022 2021 Nonaccrual loans held for investment $ 91,687 $ 44,232 $ 32,812 OREO and repossessed assets 1,190 49 43 Total NPAs $ 92,877 $ 44,281 $ 32,855 Nonaccrual loans to total loans 0.50 % 0.29 % 0.28 % NPAs to total assets 0.34 0.18 0.16 ACL - loans to nonaccrual loans coverage ratio 2.27 3.60 3.12 The increase in nonaccrual loans since December 31, 2022 is primarily driven by a small population of large commercial loans that moved to nonaccrual status, which contributed $45.8 million of the increase.
Table 14 - NPAs As of December 31, (in thousands) 2024 2023 2022 Nonaccrual loans held for investment $ 113,579 $ 91,687 $ 44,232 OREO and repossessed assets 2,056 1,190 49 Total NPAs $ 115,635 $ 92,877 $ 44,281 Nonaccrual loans to total loans 0.62 % 0.50 % 0.29 % NPAs to total assets 0.42 0.34 0.18 ACL - loans to nonaccrual loans coverage ratio 1.82 2.27 3.60 The increase in nonaccrual loans since December 31, 2023 was primarily driven by net increases in commercial and industrial, residential mortgage, and owner occupied CRE nonaccrual loans, which contributed $15.9 million, $10.7 million, and $8.58 million to the net increase, respectively.
Treasuries $ — — % $ 19,864 1.41 % $ — — % $ — — % $ 19,864 1.41 % U.S.
Treasuries $ — — % $ 19,896 1.40 % $ — — % $ — — % $ 19,896 1.40 % U.S.
Table 12 - Net Charge-offs Years Ended December 31, (in thousands) 2023 2022 2021 Average Loans Net Charge-Offs (Recoveries) Net Charge-Offs to Average Loans Average Loans Net Charge-Offs (Recoveries) Net Charge-Offs to Average Loans Average Loans Net Charge-Offs (Recoveries) Net Charge-Offs to Average Loans Owner occupied commercial real estate $ 3,166,495 $ 503 0.02 % $ 2,662,600 $ (1,761) (0.07) % $ 2,159,153 $ 316 0.01 % Income producing commercial real estate 3,834,585 5,939 0.15 3,283,107 (343) (0.01) 2,571,923 (229) (0.01) Commercial & industrial 2,483,931 21,059 0.85 2,271,279 6,460 0.28 2,242,764 (2,499) (0.11) Commercial construction 1,800,307 (157) (0.01) 1,502,093 (584) (0.04) 958,791 (747) (0.08) Equipment financing 1,503,826 20,162 1.34 1,217,993 3,953 0.32 971,355 3,105 0.32 Residential mortgage 2,900,916 (246) (0.01) 2,007,843 (247) (0.01) 1,462,421 (220) (0.02) Home equity 935,596 (2,878) (0.31) 802,674 (618) (0.08) 675,873 (405) (0.06) Residential construction 436,513 936 0.21 394,413 (231) (0.06) 301,591 (147) (0.05) Manufactured housing 337,712 3,859 1.14 285,556 765 0.27 — — — Consumer 176,543 3,066 1.74 144,188 2,260 1.57 142,005 864 0.61 $ 17,576,424 $ 52,243 0.30 $ 14,571,746 $ 9,654 0.07 $ 11,485,876 $ 38 — The increase in net charge-offs in 2023 was mostly attributable to higher equipment financing net charge-offs, mostly related to long haul trucking equipment loans, and one commercial relationship charge-off totaling $19.0 million.
Table 13 - Net Charge-offs Years Ended December 31, (dollars in thousands) 2024 2023 2022 Average Loans Net Charge-Offs (Recoveries) Net Charge-Offs to Average Loans Average Loans Net Charge-Offs (Recoveries) Net Charge-Offs to Average Loans Average Loans Net Charge-Offs (Recoveries) Net Charge-Offs to Average Loans Owner occupied CRE $ 3,302,948 $ (2) — % $ 3,166,495 $ 503 0.02 % $ 2,662,600 $ (1,761) (0.07) % Income producing CRE 4,193,032 3,581 0.09 3,834,585 5,939 0.15 3,283,107 (343) (0.01) Commercial & industrial 2,349,933 13,839 0.59 2,483,931 21,059 0.85 2,271,279 6,460 0.28 Commercial construction 1,865,786 9 — 1,800,307 (157) (0.01) 1,502,093 (584) (0.04) Equipment financing 1,577,020 22,943 1.45 1,503,826 20,162 1.34 1,217,993 3,953 0.32 Residential mortgage 3,233,863 54 — 2,900,916 (246) (0.01) 2,007,843 (247) (0.01) Home equity 991,460 (77) (0.01) 935,596 (2,878) (0.31) 802,674 (618) (0.08) Residential construction 223,399 264 0.12 436,513 936 0.21 394,413 (231) (0.06) Manufactured housing 203,735 14,388 7.06 337,712 3,859 1.14 285,556 765 0.27 Consumer 183,003 2,691 1.47 176,543 3,066 1.74 144,188 2,260 1.57 $ 18,124,179 $ 57,690 0.32 $ 17,576,424 $ 52,243 0.30 $ 14,571,746 $ 9,654 0.07 In both 2024 and 2023, we had individually significant charge-off events that contributed to elevated total net charge-offs.
The increase was primarily a result of net income of $188 million, the issuance of $394 million of common stock in connection with the Progress and First Miami acquisitions and other comprehensive income of $90.3 million mostly driven by unrealized holding gains on AFS debt securities.
The increase was primarily a result of net income of $252 million and other comprehensive income of $26.3 million, mostly driven by unrealized holding gains on AFS debt securities. These increases were partially offset by dividends on common and preferred stock of $119 million.
We have outstanding junior subordinated debentures related to trust preferred securities totaling $34.3 million at December 31, 2023, of which $33.0 million (excluding common securities) qualified as Tier 2 capital. Further information on trust preferred securities is provided in Note 13 to the consolidated financial statements.
In addition, we had outstanding junior subordinated debentures related to trust preferred securities totaling $25.8 million at December 31, 2024, of which $25.0 million (excluding common securities) qualified as Tier 2 capital.
The following table outlines the minimum ratios required for capital adequacy purposes, as well as the thresholds for a categorization of “well-capitalized”. Table 21 - Capital Ratios As of December 31, United Community Banks, Inc.
Further information on subordinated debt and trust preferred securities is provided in Note 12 to the consolidated financial statements. 63 The following table outlines the minimum ratios required for capital adequacy purposes, as well as the thresholds for a categorization of “well-capitalized”. Table 22 - Capital Ratios As of December 31, United Community Banks, Inc.
Weighted-average yield for each maturity range includes coupon interest, discount accretion and premium amortization and has been calculated using the amortized cost of each security in that range. The composition and maturity / repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs.
The following table presents the amortized cost of securities by contractual maturity of investment securities and weighted-average yields on a FTE basis. Weighted-average yield for each maturity range includes coupon interest, discount accretion and premium amortization and has been calculated using the amortized cost of each security in that range.
These sources of liquidity are generally short-term in nature and are used as necessary to fund asset growth and meet other short-term liquidity needs.
These sources of liquidity are generally short-term in nature and are used as necessary to fund asset growth and meet other short-term liquidity needs. At December 31, 2024, we had sufficient qualifying collateral to support additional borrowings, which is detailed in the table below.
As of December 31, 2023, we also had $13.7 million in commitments for future capital calls to fintech fund limited partnerships that have not been reflected in the consolidated balance sheet. 62 We are not involved in off-balance sheet contractual relationships, other than those disclosed in this Report, that could result in liquidity needs or other commitments, or that could significantly affect earnings.
As of December 31, 2024, we also had $10.6 million in commitments for future capital calls to fintech fund limited partnerships that have not been reflected in the consolidated balance sheet.
At December 31, 2023, we had consolidated total assets of $27.3 billion and 3,121 full-time equivalent employees. Recent Developments Mergers and Acquisitions In the past two years, we have continued to expand through acquisitions as follows: • On July 1, 2023, we completed the acquisition of First Miami, which operated three offices in the Miami metropolitan area.
At December 31, 2024, we had consolidated total assets of $27.7 billion and 2,979 full-time equivalent employees. Recent Developments Mergers and Acquisitions In the past two years, we have continued to expand through acquisitions, which are described below. The acquired entities’ results are included in our consolidated results beginning on their respective acquisition dates.
Expected maturities may differ from contractual maturities because issuers and borrowers may have the right to call or prepay obligations.
The composition and maturity / repricing distribution of the securities portfolio is subject to change depending on rate sensitivity, capital and liquidity needs. Expected maturities may differ from contractual maturities because issuers and borrowers may have the right to call or prepay obligations.
In addition, because the Holding Company is a separate entity and apart from the Bank, it must provide for its own liquidity. The Holding Company is responsible for the payment of dividends declared for its common and preferred shareholders, and interest and principal on any outstanding debt or trust preferred securities.
The Holding Company is responsible for the payment of dividends declared for its common and preferred shareholders, and interest and principal on any outstanding debt or trust preferred securities. The Holding Company currently has internal capital resources to meet these obligations.

… 177 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+9 added−6 removed4 unchanged
Biggest changeWhile the primary policy scenarios focus on a 12-month time frame, longer time horizons are also modeled. Our policy is based on the 12-month impact on net interest revenue of interest rate shocks and ramps that increase from 100 to 400 basis points or decrease 100 to 200 basis points from the base scenario.
Biggest changeOther scenarios analyzed may include delayed rate shocks, yield curve steepening or flattening, or other variations in rate movements. While the primary policy scenarios focus on a 12-month time frame, longer time horizons are also modeled.
ALCO meets periodically and has responsibility for formulating and recommending asset/liability management policies to the Board, formulating and implementing strategies to improve balance sheet positioning and/or earnings, and reviewing interest rate sensitivity. One of the tools management uses to estimate and manage the sensitivity of net interest revenue to changes in interest rates is an asset/liability simulation model.
The ALCO meets periodically and has responsibility for formulating and recommending asset/liability management policies to the Board, formulating and implementing strategies to improve balance sheet positioning and/or earnings, and reviewing interest rate sensitivity. One of the tools management uses to estimate and manage the sensitivity of net interest revenue to changes in interest rates is an asset/liability simulation model.
The objective of interest rate risk management is to identify and manage the sensitivity of net interest revenue to changing interest rates, consistent with our overall financial goals. Based on economic conditions, asset quality and various other considerations, management establishes tolerance ranges for interest rate sensitivity and manages within these ranges.
The primary objective of interest rate risk management is to identify and manage the sensitivity of net interest revenue to changing interest rates, consistent with our overall financial goals. Based on economic conditions, asset quality and various other considerations, management establishes tolerance ranges for interest rate sensitivity and manages within these ranges.
Net interest revenue and the fair value of financial instruments are influenced by changes in the level of interest rates. We limit our exposure to fluctuations in interest rates through policies established by our ALCO and approved by the Board.
Net interest revenue and the fair value of financial instruments are influenced by changes in the level of interest rates. We attempt to limit our exposure to fluctuations in interest rates through policies established by our ALCO and approved by the Board.
Resulting estimates are based upon several assumptions for each scenario, including loan and deposit re-pricing characteristics and the rate of prepayments. ALCO periodically reviews the assumptions for reasonableness based on historical data and future expectations; however, actual net interest revenue may differ from model results.
Resulting estimates are based upon multiple assumptions for each scenario, including loan and deposit re-pricing characteristics and the rate of prepayments. The ALCO periodically reviews the assumptions for reasonableness based on historical data and future expectations; however, actual net interest revenue may differ from model results.
As of December 31, 2023, the modeled total deposit beta, which is measured as the change in our overall deposit rate as a percentage of the change in the targeted Federal Funds rate in a rising rate environment, was 43%.
As of December 31, 2024, our modeled total deposit beta, which is measured as the change in our overall deposit rate as a percentage of the change in the targeted federal funds rate, was 43% in an up scenario and 38% in a down scenario.
Our policy limits the projected change in net interest revenue over the first 12 months to an 8% decrease for each 100 basis point change in the increasing and decreasing rate ramp and shock scenarios. The following table presents our interest sensitivity position at the dates indicated.
Our policy limits the projected change in net interest revenue from the base scenario to 8% for each 100 basis point change in simulations with rate shock and ramp scenarios. The following table presents our interest sensitivity position at the dates indicated.
Policy limits are based on immediate rate shock scenarios, as well as gradually rising and falling rate scenarios, which are all compared to the base scenario. Other scenarios analyzed may include delayed rate shocks, yield curve steepening or flattening, or other variations in rate movements.
Policy limits are based on immediate rate shock scenarios, as well as gradually rising and falling rate scenarios, which are all compared to the base scenario. Our assumptions include floors such that market rates and discount rates do not go below zero.
In the shock scenarios, rates immediately change the full amount at the scenario onset. In the ramp scenarios, rates change by 25 basis points per month.
Our policy is based on the 12-month impact on net interest revenue simulations with various interest rate shocks and ramps compared to the base scenario. In the shock scenarios, rates immediately change the full amount at the scenario onset. In the ramp scenarios, rates change by 25 basis points per month until they reach the predetermined levels.
Table 22 - Interest Sensitivity Increase (Decrease) in Net Interest Revenue from Base Scenario at December 31, 2023 2022 Change in Rates Shock Ramp Shock Ramp 200 basis point increase (0.88) % (1.70) % 6.97 % 4.33 % 100 basis point increase (0.38) (0.88) 3.53 2.85 100 basis point decrease (0.60) 0.14 (3.78) (3.12) 200 basis point decrease (2.89) 0.10 (8.39) (5.07) The current environment is marked by the most rapid rate increases in decades, which, in part, has made non-bank products, such as U.S.
Table 23 - Interest Sensitivity Increase (Decrease) in Net Interest Revenue from Base Scenario at December 31, 2024 2023 Change in Rates Shock Ramp Shock Ramp 200 basis point increase 2.01 % 0.92 % (0.88) % (1.70) % 100 basis point increase 1.19 0.66 (0.38) (0.88) 100 basis point decrease (2.27) (1.46) (0.60) 0.14 200 basis point decrease (6.00) (2.38) (2.89) 0.10 Our interest sensitivity model includes significant key assumptions which may change over time.
Although our model generally assumes no change in deposit portfolio size or composition, we have included an assumption for the runoff of surge deposits since 2021. In the second quarter of 2023, in response to the rapid rate increases mentioned above, we increased the beta assumption in our model.
The scenario results presented in the table above assume parallel movements in the yield curve, which may differ from actual future curve behavior. Other than an assumption for the runoff of surge deposits, our model generally assumes no change in deposit portfolio size or composition.
Removed
Treasuries and money market funds, more attractive to our deposit customers. For this and other reasons such as the Federal Reserve’s quantitative tightening and the aftermath of COVID stimulus, the banking industry’s deposit base has been shrinking since the first half of 2022. This industry-wide outflow of deposits has increased price competition for bank deposits.
Added
In order to manage interest rate sensitivity, we executed a number of strategies to move us from being slightly liability sensitive in 2023 to slightly asset sensitive in 2024.
Removed
As such, industry deposit betas, including ours, have been increasing at a faster pace relative to the last rising rate cycle. Deposit beta is a measure of 64 the change in a bank’s average rate paid on deposits to the change in the federal funds rate.
Added
The primary driver in the change in interest rate shocks and ramps between December 31, 2024 and 2023 is the derivative financial instruments we entered into in late 2023 and early 2024. Derivative financial instruments can 65 be a cost-effective and capital-effective means of modifying the repricing characteristics of on-balance sheet assets and liabilities.
Removed
Our cumulative total deposit beta for the current rising rate cycle increased to 42% in the fourth quarter of 2023. Our cumulative total deposit beta in the last upward rate cycle from November 2015 to July 2019 was 22%. Our interest sensitivity model includes significant key assumptions which may change over time.
Added
These contracts generally consist of interest rate swaps under which we pay a fixed rate, (or variable rate, as the case may be) and receive a variable rate (or fixed rate, as the case may be).
Removed
A higher total deposit beta assumption generally indicates a less asset sensitive balance sheet and lowers the expected increase in net interest revenue in the increasing rate scenarios.
Added
In addition to the derivative transactions, in an effort to protect against higher rates, we also shortened our investment portfolio duration to 3.9% at year-end 2024 from 4.4% at year-end 2023 and used our loan pricing strategies to encourage floating rate loans and discourage fixed rate loans.
Removed
At December 31, 2023, compared to December 31, 2022, our deposit composition was more heavily comprised of time deposits and other rate sensitive non-maturity deposits and we had less noninterest-bearing demand deposits, which reduced our asset sensitivity to a more neutral position.
Added
Derivative financial instruments that are designated as accounting hedges are classified as either cash flow or fair value hedges. The change in fair value of cash flow hedges is recognized in OCI.
Removed
As a result, the impacts of optionality, such as prepayments and loan caps, were more visible in the rate increase scenarios.
Added
Fair value hedges recognize in earnings both the effect of the change in the fair value of the derivative financial instrument and the offsetting effect of the change in fair value of the hedged asset or liability associated with the particular risk of that asset or liability being hedged.
Added
We have other derivative financial instruments that are not designated as accounting hedges but are used for interest rate risk management purposes and as an effective economic hedge. Derivative financial instruments that are not accounted for as an accounting hedge are marked to market through earnings.
Added
All non-customer derivative financial instruments are used only for asset/liability management and as effective economic hedges, and not for trading or speculative purposes. Management believes that the risk associated with using derivative financial instruments to mitigate interest rate risk sensitivity is minimal and should not have any material unintended effect on our financial condition or results of operations.
Added
In order to mitigate potential credit risk, from time to time we may require the counterparties to derivative contracts to pledge cash or securities as collateral to cover the net exposure. See Note 8 to the financial statements for further detail.

Other UCB 10-K year-over-year comparisons