United Community Banks Inc.

05/06/2026 | Press release | Distributed by Public on 05/06/2026 13:54

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion of our financial condition at March 31, 2026 and December 31, 2025 and our results of operations for the three months ended March 31, 2026 and 2025. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements and is intended to provide insight into our results of operations and financial condition. The following discussion and analysis should be read along with our consolidated financial statements and related notes included in Part I - Item 1 of this Report, "Cautionary Note Regarding Forward-Looking Statements" beginning on page 4 of this Report and the risk factors discussed in our Item 1A. of our 2025 10-K and in Part II, Item IA. of this Report.
Unless the context otherwise requires, in this Report, the terms "we," "our," "us" refer to United on a consolidated basis.
Non-GAAP Reconciliation and Explanation
This Report contains financial information determined by methods other than in accordance with GAAP. Such non-GAAP financial information includes the following measures: "tangible book value per common share," and "tangible common equity to tangible assets." In addition, management presents non-GAAP operating performance measures, which exclude merger-related and other items that are not part of our ongoing business operations. Operating performance measures include "noninterest income - operating," "noninterest expense - operating," "net income - operating," "diluted income per common share - operating," "return on common equity - operating," "return on tangible common equity - operating," and "return on assets - operating," "efficiency ratio - operating" and "tangible common equity to tangible assets." We have developed internal policies and procedures to accurately capture and account for merger-related and other charges we consider to be non-operating or non-recurring and those charges are reviewed with the Audit Committee of our Board each quarter. We use these non-GAAP measures because we believe they provide useful supplemental information for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. We believe these non-GAAP measures may also provide users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as a comparison to financial results for prior periods. Nevertheless, non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. These non-GAAP measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP. In addition, because non-GAAP measures are not standardized, it may not be possible to compare our non-GAAP measures to similarly titled measures used by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included in Table 16 of MD&A.
Executive Overview and Results of Operations
Overview
We offer a wide array of commercial and consumer banking services and investment advisory solutions provided through a 200 banking office network throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama. Our equipment finance and SBA/USDA lending businesses operate throughout the United States. At March 31, 2026, we had consolidated total assets of $28.2 billion and 3,118 full-time equivalent employees.
Merger Activity
Subsequent to the end of the first quarter, on April 21, 2026, we entered into a definitive merger agreement to acquire Peach State Bancshares, Inc. and its wholly-owned subsidiary, Peach State Bank & Trust, headquartered in Gainesville, Georgia. As of March 31, 2026, Peach State Bank & Trust reported total assets of $788 million, with total loans of $498 million and total deposits of $713 million. We expect the merger to close in the third quarter of 2026. See Note 10 to the Notes of the Financial Statements for further detail.
Results of Operations
We reported net income and diluted earnings per common share of $84.3 million and $0.69, respectively, for the first quarter of 2026. This compared to net income and diluted earnings per common share of $71.4 million and $0.58, respectively, for the same period in 2025. Net income - operating for the first quarter of 2026 was $84.7 million, which excluded merger-related and other charges and a $6.70 million one-time payroll transition bonus, which were partially offset by a $5.18 million gain on a terminated cash flow hedge and the $1.89 million release of an accrual for the special FDIC insurance assessment related to certain 2023 bank failures that the
FDIC announced it no longer intended to collect. Net income - operating for the first quarter of 2025 was $72.4 million and excluded merger-related and other charges.
We reported total revenue for the first quarters of 2026 and 2025 of $277 million and $248 million, respectively. FTE net interest revenue increased to $234 million for the first quarter of 2026, compared to $213 million for the first quarter of 2025. The increase was mostly driven by a $20.9 million decrease in deposit interest expense as the average rate paid on interest-bearing deposits decreased 52 basis points. The net interest margin increased to 3.65% for the three months ended March 31, 2026 from 3.36% for the same period in 2025, primarily due to the steeper decrease in interest rates paid on deposits compared to the decrease in interest rates earned on loans.
Noninterest income of $43.7 million for the first quarter of 2026 was up $8.09 million, or 23%, from the first quarter of 2025, primarily driven by the $5.18 million gain on the terminated cash flow hedge and a $1.39 million increase in other investment income.
We recorded provisions for credit losses of $10.9 million and $15.4 million for the first quarters of 2026 and 2025, respectively. The lower provision expense for the first quarter of 2026 mostly reflects a more favorable economic forecast compared to that of first quarter of 2025.
For the first quarter of 2026, noninterest expense of $157 million increased by $16.2 million compared to the same period of 2025. The increase was mostly driven by a $17.0 million increase in salaries and employee benefits, primarily due to the one-time payroll transition bonus of $6.70 million and higher total compensation, a portion of which resulted from the acquisition of ANB in the second quarter of 2025, annual merit increases that became effective April 1, 2025 and higher incentives. This was partially offset by a $2.37 million decrease in FDIC assessment and other regulatory charges, reflecting the release of the remaining FDIC special assessment accrual and a lower assessment rate for the first quarter of 2026 compared to the same period of 2025.
Results for the first quarter of 2026 are discussed in further detail throughout the following sections of MD&A.
UNITED COMMUNITY BANKS, INC.
Table 1 - Financial Highlights
(dollars in thousands, except per share data) 2026 2025
First Quarter
2026 - 2025 Change
First
Quarter
Fourth Quarter
Third Quarter
Second Quarter
First
Quarter
INCOME SUMMARY
Interest revenue $ 333,961 $ 346,367 $ 353,850 $ 347,365 $ 335,357
Interest expense 101,197 108,441 120,221 121,834 123,336
Net interest revenue 232,764 237,926 233,629 225,531 212,021 10 %
Noninterest income 43,746 40,462 43,219 34,708 35,656 23
Total revenue 276,510 278,388 276,848 260,239 247,677 12
Provision for credit losses 10,853 13,662 7,907 11,818 15,419 (30)
Noninterest expense 157,302 152,048 150,868 147,919 141,099 11
Income before income tax expense 108,355 112,678 118,073 100,502 91,159 19
Income tax expense 24,066 26,223 26,579 21,769 19,746 22
Net income 84,289 86,455 91,494 78,733 71,413 18
Non-operating items 508 606 3,468 4,833 1,297 n/m
Income tax benefit of non-operating items (113) (133) (751) (1,047) (281) n/m
Net income - operating (1)
$ 84,684 $ 86,928 $ 94,211 $ 82,519 $ 72,429 17
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP $ 0.69 $ 0.70 $ 0.70 $ 0.63 $ 0.58 19
Diluted net income - operating (1)
0.70 0.71 0.75 0.66 0.59 19
Cash dividends declared 0.25 0.25 0.25 0.24 0.24 4
Book value 30.54 30.17 29.44 28.89 28.42 7
Tangible book value (3)
22.56 22.24 21.59 21.00 20.58 10
Key performance ratios:
Return on common equity - GAAP (2)(4)
9.35 % 9.48 % 9.20 % 8.45 % 7.89 %
Return on common equity - operating (1)(2)(4)
9.39 9.53 9.83 8.87 8.01
Return on tangible common equity - operating (1)(2)(3)(4)
13.05 13.31 13.56 12.34 11.21
Return on assets - GAAP (4)
1.22 1.21 1.29 1.11 1.02
Return on assets - operating (1)(4)
1.22 1.22 1.33 1.16 1.04
Net interest margin (FTE) (4)
3.65 3.62 3.58 3.50 3.36
Efficiency ratio - GAAP 56.66 54.40 54.30 56.69 56.74
Efficiency ratio - operating (1)
55.65 54.19 53.05 54.84 56.22
Equity to total assets 12.97 12.99 12.78 12.86 12.56
Tangible common equity to tangible assets (3)
9.92 9.92 9.71 9.45 9.18
ASSET QUALITY
NPAs $ 98,623 $ 93,498 $ 97,916 $ 83,959 $ 93,290 6
ACL - loans 208,396 210,429 215,791 216,500 211,974 (2)
Net charge-offs 10,377 16,418 7,676 8,225 9,607 8
ACL - loans to loans 1.06 % 1.09 % 1.13 % 1.14 % 1.15 %
Net charge-offs to average loans (4)
0.22 0.34 0.16 0.18 0.21
NPAs to total assets 0.35 0.33 0.35 0.30 0.33
AT PERIOD END ($ in millions)
Loans $ 19,602 $ 19,384 $ 19,175 $ 18,921 $ 18,425 6
Investment securities 5,889 5,988 6,163 6,382 6,661 (12)
Total assets 28,177 28,003 28,143 28,086 27,874 1
Deposits 24,025 23,798 24,021 23,963 23,762 1
Shareholders' equity 3,655 3,639 3,597 3,613 3,501 4
Common shares outstanding (thousands) 119,684 120,598 121,553 121,431 119,514 -
(1) Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on page 46. (2) Net income less preferred stock dividends, divided by average realized common equity, which excludes AOCI. (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized.
Net Interest Revenue
The following discussion provides additional details on the daily average balances and net interest revenue for the periods presented. The table that follows indicates the relationship between interest revenue and expense and the daily average amounts of assets and liabilities, which provides further insight into net interest spread and net interest margin for the periods indicated.
FTE net interest revenue for the first quarter of 2026 was $234 million, representing an increase of $20.9 million, or 10%, from the same period in 2025. The net interest spreads for the first quarters of 2026 and 2025 were 2.92% and 2.46%, respectively. The net interest margins for the first quarters of 2026 and 2025 were 3.65% and 3.36%, respectively.
The interest rate environment changes over the past year included aggregate reductions of 75 basis points in the federal funds rate, which drove decreases in funding costs, and to a lesser extent, loan yields. As a result, the primary driver in the increase in FTE net interest revenue for the first quarter of 2026 was a $20.9 million decrease in deposit interest expense. Interest revenue from interest-earning assets decreased $1.28 million. Loan interest revenue increased $12.7 million compared to the same period of 2025, mostly driven by loan growth, while securities interest revenue decreased $12.7 million due to both a lower average balances and a decrease in the average rate earned. The increase in net interest revenue for the first quarter of 2026 also reflects net interest revenue from the loans and deposits acquired in the ANB merger, which closed on May 1, 2025. The increase in net interest margin and net interest spread was primarily driven by a steeper decrease in average rates paid on deposits compared to the decrease in rates earned on loans.
Table 2 - Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended March 31,
(dollars in thousands, (FTE))
2026 2025
Average Balance Interest Average Rate Average Balance Interest Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)
$ 19,403,795 $ 286,629 5.99 % $ 18,213,501 $ 273,930 6.10 %
Taxable securities (3)
5,926,885 44,483 3.00 6,737,658 57,172 3.39
Tax-exempt securities (FTE) (1)(3)
346,420 2,202 2.54 356,712 2,245 2.52
Other interest-earning assets 308,424 1,755 2.31 400,592 3,001 3.04
Total interest-earning assets (FTE) 25,985,524 335,069 5.22 25,708,463 336,348 5.29
Noninterest-earning assets:
Allowance for credit losses (212,867) (210,169)
Cash and due from banks 200,085 219,540
Premises and equipment 393,853 396,443
Other assets (3)
1,705,566 1,610,104
Total assets $ 28,072,161 $ 27,724,381
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand $ 5,853,104 28,129 1.95 $ 6,134,004 37,390 2.47
Money market 6,826,707 40,709 2.42 6,583,963 49,541 3.05
Savings 1,089,856 480 0.18 1,096,308 624 0.23
Time 3,651,034 28,183 3.13 3,446,048 30,831 3.63
Brokered time deposits 60,279 528 3.55 50,447 548 4.41
Total interest-bearing deposits 17,480,980 98,029 2.27 17,310,770 118,934 2.79
Federal funds purchased and other borrowings 107,668 998 3.76 80,760 1,107 5.56
Federal Home Loan Bank advances 102,278 969 3.84 38,900 433 4.51
Long-term debt 120,450 1,201 4.04 254,220 2,862 4.57
Total borrowed funds 330,396 3,168 3.89 373,880 4,402 4.77
Total interest-bearing liabilities 17,811,376 101,197 2.30 17,684,650 123,336 2.83
Noninterest-bearing liabilities:
Noninterest-bearing deposits 6,265,370 6,194,217
Other liabilities 337,611 369,939
Total liabilities 24,414,357 24,248,806
Shareholders' equity 3,657,804 3,475,575
Total liabilities and shareholders' equity $ 28,072,161 $ 27,724,381
Net interest revenue (FTE) $ 233,872 $ 213,012
Net interest-rate spread (FTE) 2.92 % 2.46 %
Net interest margin (FTE) (4)
3.65 % 3.36 %
(1)Interest revenue on tax-exempt securities and loans includes a taxable-equivalent adjustment to reflect comparable interest on taxable securities and loans. The FTE adjustment totaled $1.11 million and $991,000, respectively, for the three months ended March 31, 2026 and 2025. The tax rate used to calculate the adjustment was 25%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued.
(3)Unrealized losses on AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $176 million in 2026 and $269 million in 2025 are included in other assets for purposes of this presentation.
(4)Net interest margin is taxable equivalent net interest revenue divided by average interest-earning assets.
Noninterest Income
The following table presents the components of noninterest income for the periods indicated.
Table 3 - Noninterest Income
(dollars in thousands)
Three Months Ended
March 31, 		Change
2026 2025 Amount Percent
Service charges and fees:
Overdraft fees $ 3,129 $ 3,027 $ 102 3 %
ATM and debit card fees 3,606 3,776 (170) (5)
Other service charges and fees 2,810 2,732 78 3
Total service charges and fees 9,545 9,535 10 -
Mortgage loan gains and related fees 8,029 6,122 1,907 31
Wealth management fees 4,629 4,465 164 4
Net gains (losses) on sales of other loans 1,893 1,396 497 36
Lending and loan servicing fees 3,971 4,165 (194) (5)
Securities gains, net 133 6 127 n/m
Other noninterest income:
Customer derivative fees 1,572 1,252 320 26
Trading securities losses (1,074) - (1,074) n/m
Other investment income 1,797 404 1,393 n/m
BOLI 1,932 2,109 (177) (8)
Treasury management income 2,393 1,983 410 21
Other 8,926 4,219 4,707 n/m
Total other noninterest income 15,546 9,967 5,579 56
Total noninterest income $ 43,746 $ 35,656 $ 8,090 23
The increase in mortgage loan gains and related fees for the three months ended March 31, 2026 compared to the same period of 2025 was primarily a result of an increase in mortgage servicing income of $1.04 million, which includes fair value adjustments to our mortgage servicing asset. During the first quarter of 2026, we began an economic hedging strategy utilizing a trading securities portfolio, with the intention of offsetting the impact of the changes in the fair value of our mortgage servicing asset with the gains or losses on trading securities. During the first quarter of 2026, we recognized $1.07 million losses on trading securities, which is included in other noninterest income.
During the first quarter of 2026, other investment income reflects higher earnings on our fintech and limited partnership investments compared to the same period of 2025. Our other investment portfolio includes mutual funds, equity securities, fintech and other limited partnership investments. Gains and losses from these investments are generally unrealized.
The increase in other noninterest income was primarily driven by the $5.18 million gain on the termination of an interest rate cap accounted for as a cash flow hedge of our $100 million subordinated debt, for which redemption notice was provided in the first quarter of 2026. The subordinated debt was subsequently redeemed on April 30, 2026.
Provision for Credit Losses
We recorded provisions for credit losses of $10.9 million for the three months ended March 31, 2026, compared to $15.4 million for the same period of 2025. 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. Additional discussion on credit quality and the ACL is included in the "Allowance for Credit Losses" section of MD&A in this Report.
Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated.
Table 4 - Noninterest Expense
(dollars in thousands)
Three Months Ended
March 31, 		Change
2026 2025 Amount Percent
Salaries and employee benefits $ 101,249 $ 84,267 $ 16,982 20 %
Communications and equipment 14,102 13,699 403 3
Occupancy 11,725 10,929 796 7
Advertising and public relations 2,397 1,881 516 27
Postage, printing and supplies 2,757 2,561 196 8
Professional fees 5,576 5,931 (355) (6)
Lending and loan servicing expense 2,582 1,987 595 30
Outside services - electronic banking 3,559 2,763 796 29
FDIC assessments and other regulatory charges 2,269 4,642 (2,373) (51)
Amortization of intangibles 3,063 3,286 (223) (7)
Merger-related and other charges 873 1,297 (424) (33)
Other 7,150 7,856 (706) (9)
Total noninterest expense $ 157,302 $ 141,099 $ 16,203 11
The increase in salaries and employee benefits for the first quarter of 2026 compared to 2025 was mostly driven by the $6.70 million one-time payroll transition bonus described below, annual merit increases that went into effect on April 1, 2025, higher performance-related incentive compensation and the addition of ANB employees on May 1, 2025.
The one-time payroll transition bonus was a result of our first quarter transition from a semi-monthly payroll cycle to a bi-weekly payroll cycle in arrears. The bonus was paid to bridge the resulting gap in payroll dates due to the schedule change.
The decrease in FDIC assessments and other regulatory charges reflects a $1.89 million accrual reversal of the FDIC special assessment related to certain 2023 bank failures, as the FDIC announced it no longer intended to collect the remainder of the assessment. In addition, our assessment rate for the first quarter of 2026 decreased compared to the first quarter of 2025.
Income Tax Expense
The following table presents income tax expense and the effective tax rate for the periods indicated.
Table 5 - Income Tax Expense
(dollars in thousands)
Three Months Ended
March 31,
2026 2025
Income before income taxes $ 108,355 $ 91,159
Income tax expense 24,066 19,746
Effective tax rate 22.2 % 21.7 %
Managing Risk
Our business purpose is to provide financial services and products to customers, which inherently comes with risk. We strive to manage, mitigate and optimize that risk appropriately. We maintain an enterprise risk framework that provides for the structure of the governance and oversight of our primary risk categories, which include credit, liquidity, market/interest rate, capital, strategic, operational, legal/compliance and reputation. The objective of our risk framework is to establish a formal structure for identifying, assessing, managing, monitoring and reporting risks in order to assist the Bank in achieving its strategic objectives.
The following discussion of our financial results and activities for the periods covered by this Report are grouped into their most relevant risk categories of Credit Risk Management, Liquidity Risk Management, Market / Interest Rate Risk Management and
Capital Risk Management. For more information on our risks, see Item 1A. Risk Factors and the Managing Risk section in MD&A of the 2025 10-K.
Credit Risk Management
Our loan portfolio is the largest asset class on our balance sheet; therefore, credit risk management plays a key role in our overall risk management infrastructure. Credit risk is inherent to the lending function; thus, a sound risk management system is essential to maximize returns within acceptable risk parameters.
Asset Quality
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. Our credit risk management function is responsible for monitoring asset quality and Board approved portfolio concentration limits, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures.
We conduct reviews of classified performing and non-performing loans, FDMs, past due loans and portfolio concentrations on a regular basis to identify risk migration and potential charges to the ACL. These items are discussed in a series of meetings attended by Credit Risk Management and other senior leadership from various lending groups. 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.
For more information, see Credit Risk Management in the MD&A of the 2025 10-K.
Loans
As of March 31, 2026, loans totaled $19.6 billion, compared to $19.4 billion at December 31, 2025. The increase was primarily driven by organic loan growth, particularly in our commercial portfolio.
Allowance for Credit Losses
The ACL reflects our 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. See the Critical Accounting Estimates section of MD&A in our 2025 10-K for additional information on the ACL.
The ACL for loans at March 31, 2026 totaled $208 million compared to $210 million at December 31, 2025 and the ACL for loans as a percentage of total loans decreased slightly to 1.06% from 1.09%. The decrease in the ACL was primarily attributable to a more positive economic forecast at March 31, 2026 compared to December 31, 2026. Our ACL for unfunded commitments, which totaled $17.6 million, increased $2.51 million compared to December 31, 2025 mostly due to an increase in our construction commitments.
The following tables provide information on loans and the ACL for the periods indicated. See Note 3 to the consolidated financial statements for further information on loans and the ACL.
Table 6 - Loan Portfolio Composition and ACL Allocation
(dollars in thousands)
March 31, 2026 December 31, 2025
Loans % of portfolio ACL ACL to Loans Loans % of portfolio ACL ACL to Loans
Owner occupied CRE $ 4,040,518 21 % $ 25,127 0.62 % $ 3,949,898 20 % $ 24,888 0.63 %
Income producing CRE 4,983,718 25 41,358 0.83 5,032,342 26 44,071 0.88
Commercial & industrial 2,770,924 14 43,696 1.58 2,696,291 14 43,269 1.60
Commercial construction & land 1,072,140 5 10,198 0.95 997,802 5 8,286 0.83
Equipment financing 1,896,828 10 42,862 2.26 1,847,999 10 45,852 2.48
Total commercial 14,764,128 75 163,241 1.11 14,524,332 75 166,366 1.15
Residential mortgage 3,122,361 16 29,333 0.94 3,157,017 16 29,241 0.93
Home equity 1,343,785 7 12,769 0.95 1,319,474 7 11,849 0.90
Residential construction & land 185,353 1 1,900 1.03 190,625 1 1,799 0.94
Consumer 186,891 1 1,153 0.62 187,536 1 1,174 0.63
Total (1)
$ 19,602,518 $ 208,396 1.06 $ 19,378,984 $ 210,429 1.09
(1) Loans presented exclude fair value hedge basis adjustments.
The following table provides a summary of net charge-offs to average loans for the periods indicated.
Table 7 - Net Charge-offs to Average Loans
(dollars in thousands)
Three Months Ended
March 31,
2026 2025
Net charge-offs (recoveries)
Owner occupied CRE $ 666 $ 126
Income producing CRE (85) 718
Commercial & industrial 3,309 2,447
Commercial construction 6 (138)
Equipment financing 5,835 5,042
Residential mortgage 133 (1)
Home equity (54) (62)
Residential construction 12 219
Consumer 555 1,256
Total net charge-offs $ 10,377 $ 9,607
Average loans
Owner occupied CRE $ 3,955,804 $ 3,393,849
Income producing CRE 4,985,059 4,369,597
Commercial & industrial 2,699,674 2,456,768
Commercial construction 1,083,555 1,661,366
Equipment financing 1,838,992 1,685,187
Residential mortgage 3,146,817 3,210,729
Home equity 1,316,636 1,077,463
Residential construction 191,373 173,987
Consumer 185,885 184,555
Total average loans $ 19,403,795 $ 18,213,501
Net charge-offs to average loans (1)
Owner occupied CRE 0.07 % 0.02 %
Income producing CRE (0.01) 0.07
Commercial & industrial 0.50 0.40
Commercial construction - (0.03)
Equipment financing 1.29 1.21
Residential mortgage 0.02 -
Home equity (0.02) (0.02)
Residential construction 0.03 0.51
Consumer 1.21 2.76
Total 0.22 0.21
(1) Annualized.
Nonperforming Assets
The table below summarizes NPAs for the periods indicated. NPAs include nonaccrual loans, OREO and repossessed assets. The main driver of the increase in nonaccrual loans since December 31, 2025 was a small population of larger owner-occupied CRE loans moving to nonaccrual during the first quarter of 2026.
Table 8 - NPAs
(dollars in thousands)
March 31,
2026 		December 31,
2025 		$ Change
Nonaccrual loans:
Owner occupied CRE $ 18,265 $ 11,165 $ 7,100
Income producing CRE 11,037 11,488 (451)
Commercial & industrial 19,890 18,294 1,596
Commercial construction & land 17 18 (1)
Equipment financing 8,024 10,383 (2,359)
Total commercial 57,233 51,348 5,885
Residential mortgage 31,906 32,423 (517)
Home equity 6,209 5,247 962
Residential construction & land 355 1,079 (724)
Consumer 1,009 1,001 8
Total
96,712 91,098 5,614
OREO and repossessed assets 1,911 2,400 (489)
Total NPAs $ 98,623 $ 93,498 $ 5,125
Nonaccrual loans as a percentage of total loans 0.49 % 0.47 %
NPAs as a percentage of total assets 0.35 0.33
ACL - loans to nonaccrual loans coverage ratio 2.15 2.31
Concentration Considerations
Commercial loans make up 75% of our loan portfolio, which includes owner occupied and income producing real estate, commercial and industrial, commercial construction and land and equipment financing loans.
Approximately 75% of our loan portfolio is secured by real estate and therefore, can be affected by changes in real estate valuation.
Non-owner occupied CRE loans
The following table provides industry concentrations of our non-owner occupied CRE loans, which include the income producing CRE portfolio and non-owner occupied commercial construction loans as of the dates indicated.
Table 9 - Industry Concentrations of Non-Owner Occupied CRE Loans
(dollars in thousands)
March 31, 2026 December 31, 2025
Total
% of loans in category
Total
% of loans in category
Retail $ 1,369,110 23 % $ 1,338,882 23 %
Office 923,072 16 898,359 15
Multifamily 830,929 14 889,579 15
Warehouse and industrial 678,827 11 656,749 11
Hotel 458,708 8 487,467 8
Builder finance 375,562 6 360,698 6
Rental 1-4 family 330,665 6 325,105 6
Self storage 304,431 5 296,583 5
Other 282,825 5 265,937 5
Senior care 195,811 3 204,558 3
Land 150,494 3 155,956 3
Total
$ 5,900,434 100 % $ 5,879,873 100 %
Liquidity Risk 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. The primary objective of liquidity management is to maintain the ability to meet the daily cash flow requirements of customers, both depositors and borrowers, at a reasonable cost. As part of our liquidity management, we focus on maximizing the amount of securities and loans available as collateral for contingent liquidity sources and calibrating our assumptions in our liquidity stress test on an ongoing basis, particularly as it relates to deposit duration. We maintain an unencumbered liquid asset reserve to help ensure our ability to meet our obligations under normal conditions for at least a 12-month period and under severely adverse liquidity conditions for a minimum of 30 days. While the desired level of liquidity will vary depending upon a variety of factors, our primary goal is to maintain a sufficient level of liquidity in all expected economic environments.
The Bank's main source of liquidity is customer deposit accounts. Liquidity is also available from cash and cash equivalents and wholesale funding sources consisting primarily of Federal funds purchased, securities sold under agreements to repurchase, FHLB advances and brokered deposits. Wholesale funding instruments are generally short-term in nature and used as necessary to fund asset growth and meet other short-term liquidity needs. At the end of 2025 and through most of the first quarter of 2026, due to loan growth and some seasonal deposit attrition, we utilized modest short-term borrowings to meet short-term funding needs. At December 31, 2025, we had $85.0 million of outstanding federal funds purchased. By March 31, 2026, we were able to meet our funding needs without the use of wholesale borrowings and had no outstanding short-term borrowings at quarter-end. Our loan and securities portfolios also provide liquidity primarily through loan principal and interest payments and the maturities and sales of securities, as well as the ability to use these assets as collateral for borrowings on a secured basis.
For more information, see Liquidity Risk Management in the MD&A of the 2025 10-K.
At March 31, 2026 and December 31, 2025, we had sufficient liquid funds and qualifying collateral to support additional borrowings, which are detailed in the table below.
Table 10 - Liquid Funds and Unused Borrowing Capacity
(in thousands)
March 31, 2026 December 31, 2025
Available liquid funds:
Cash and cash equivalents $ 493,141 $ 395,754
Unused Borrowing Capacity (1):
FHLB 2,043,856 2,006,045
Federal Reserve - Discount Window 2,074,410 2,347,191
Unpledged securities available as collateral for additional borrowings 3,016,327 3,007,534
(1) Based on collateral pledged.
In addition, because the Holding Company is a separate entity and distinct from the Bank, it must provide for its own liquidity. The Holding Company is responsible for the payment of dividends declared for its common shareholders, and interest and principal on any outstanding debt or trust preferred securities. The Holding Company currently has sufficient liquid assets to meet these obligations. Holding Company liquidity is maintained at a level of at least 125% of the next 12 months of forecasted cash obligations.
In the opinion of management, our liquidity position at March 31, 2026 was sufficient to meet our expected cash flow requirements for the foreseeable future. See the consolidated statement of cash flows for further detail.
Deposits
Customer deposits are the primary source of funds for the continued growth of our earning assets. We believe our high level of service, as evidenced by our strong customer satisfaction scores, is instrumental in attracting and retaining customer deposit accounts. Since December 31, 2025, customer deposits increased $237 million, primarily driven by the increase in noninterest demand deposits. As of March 31, 2026, we had approximately $10.1 billion of uninsured deposits, of which $2.99 billion was collateralized by investment securities.
Table 11 - Deposits
(dollars in thousands)
March 31, 2026 December 31, 2025
Balance
% of Total Balance % of Total
Noninterest-bearing demand $ 6,473,101 27 % $ 6,252,252 26 %
NOW and interest-bearing demand 5,900,748 25 5,969,864 25
Money market and savings 7,821,806 32 7,781,861 33
Time 3,664,706 15 3,619,189 15
Total customer deposits 23,860,361 99 23,623,166 99
Brokered deposits 164,704 1 175,264 1
Total deposits $ 24,025,065 $ 23,798,430
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. 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. The table below summarizes the carrying value of our securities portfolio and other relevant portfolio metrics including weighted-average life and effective duration as
of the dates presented. Effective duration represents the expected change in the price of a security when rates change by 100 basis points.
Table 12 - Investment Securities
(dollars in thousands)
March 31, 2026 December 31, 2025
Carrying Value
% of portfolio
Carrying Value
% of portfolio
$ Change
AFS
$ 3,574,546 62 % $ 3,750,863 63 % $ (176,317)
HTM
2,211,523 38 2,237,356 37 (25,833)
Total investment securities
$ 5,786,069 $ 5,988,219 $ (202,150)
Investment securities as a % of total assets
21 % 21 %
Weighted average life
5.4 years 5.4 years
Swap adjusted effective duration
3.5 % 3.5 %
Effective duration
3.8 3.8
We utilize fair value hedges on a portion of our AFS securities portfolio in order to mitigate the impact of potential future unrealized losses on our tangible common equity. Gains and losses related to the hedge and hedged item are reflected in investment securities interest income. The changes in the fair value of the hedge and the hedged item substantially offset each other. See Note 4 to the financial statements for further detail.
At March 31, 2026, HTM debt securities had a fair value of $1.88 billion, indicating net unrealized losses of $333 million (pre-tax). Additional unrealized losses on HTM debt securities of $50.0 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.
See Note 2 to the consolidated financial statements for additional detail on investment securities.
Borrowing Activities
At March 31, 2026 and December 31, 2025, we had long-term debt outstanding of $121 million and $120 million, respectively, which includes subordinated debentures and trust preferred securities. During the first quarter of 2026, holders of our $100 million subordinated debentures were notified that the debt would be redeemed prior to maturity, on April 30, 2026. At March 31, 2026 there were no short-term borrowings outstanding, compared to $85.0 million at December 31, 2025. The need to utilize wholesale funding sources has decreased because our liquidity needs have been met by our deposit and cash balances.
Contractual Obligations and Off-Balance Sheet Arrangements
There have not been any material changes to our contractual obligations and off-balance sheet arrangements since December 31, 2025.
Interest Rate Sensitivity Management
Interest rate sensitivity is a function of the repricing characteristics of the portfolio of assets and liabilities. Repricing characteristics are the time frames within which the interest rates on interest-earning assets and interest-bearing liabilities are subject to change either at replacement, repricing or maturity.
Management uses an asset/liability simulation model to measure the potential change in net interest revenue over time using multiple interest rate scenarios. Our modeling is based on the 12-month impact on net interest revenue simulations with various interest rate shocks and ramps, which are compared to a base scenario that assumes rates remain unchanged. 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.
The following table presents our estimated interest sensitivity position at the dates indicated. The scenario results presented assume parallel movements in the yield curve, which may differ from actual future curve behavior. Other than an assumption for the runoff of estimated surge deposits, which is assumed to be replaced with higher cost wholesale funding, this presentation generally assumes no change in deposit portfolio size or composition.
Table 13 - Interest Sensitivity
Increase (Decrease) in Net Interest Revenue from Base Scenario at
March 31, 2026 December 31, 2025
Change in Rates Shock Ramp Shock Ramp
200 basis point increase (0.55) % 0.17 % 0.52 % 0.66 %
100 basis point increase (0.12) 0.10 0.41 0.39
100 basis point decrease (0.25) (0.40) (0.81) (0.69)
200 basis point decrease (0.75) (0.81) (2.06) (1.35)
The change in results from December 31, 2025 to March 31, 2026 are primarily driven by a reduction in notional pay-fixed, receive float swaps.
Capital Risk Management
The maintenance and management of capital levels is one of management's significant priorities. We are committed to maintaining a capital position that will support ongoing operations and achieve our strategic objectives. The ALCO and the Board are responsible for establishing capital adequacy risk ranges that are appropriate given the risks to which we are exposed and the environment in which we operate. Current and projected capital levels are compared to the capital adequacy risk ranges and reported quarterly to the ALCO and the Board. We utilize a baseline capital forecast as part of our capital management and planning process to evaluate current and future capital needs. We also use hypothetical stressed scenarios and sensitivity analyses, based on changing economic conditions and scenarios, including potential merger and acquisition transactions and debt/capital market activities. Forecasting alternative capital scenarios helps inform overall capital adequacy and capital ranges.
Shareholders' Equity Highlights
Shareholders' equity at March 31, 2026 was $3.65 billion, an increase of $16.0 million from December 31, 2025 primarily due to year-to-date earnings of $84.3 million, partially offset by common stock repurchases of $37.4 million and dividends declared on common stock of $30.4 million.
Regulatory Capital
The following table shows capital composition as of March 31, 2026 and December 31, 2025.
Table 14 - Capital Composition under Basel III
(in thousands)
United Community Banks, Inc. (Consolidated) United Community Bank
March 31,
2026 		December 31,
2025 		March 31,
2026 		December 31,
2025
Total common shareholders' equity $ 3,654,666 $ 3,638,686 $ 3,386,971 $ 3,391,455
Goodwill (925,119) (925,119) (925,119) (925,119)
Intangibles, other than goodwill and mortgage servicing rights, net of associated DTLs (34,775) (37,274) (34,775) (37,274)
DTAs arising from net operating loss and tax credit carryforwards (4,282) (2,133) (3,604) (2,156)
Net unrealized losses on AFS securities 118,717 117,606 118,077 116,985
Accumulated net gains on cash flow hedges (1,659) (5,618) - -
Net unrealized losses on HTM securities that are included in AOCI 37,014 38,308 37,014 38,308
Other 266 276 266 276
CET1 / Tier 1 Capital 2,844,828 2,824,732 2,578,830 2,582,475
Tier 2 capital instruments 45,000 65,000 - -
Qualifying ACL 216,700 215,074 216,700 215,074
Total capital $ 3,106,528 $ 3,104,806 $ 2,795,530 $ 2,797,549
The following table shows capital ratios, as calculated under applicable regulatory guidelines, at March 31, 2026 and December 31, 2025. As of March 31, 2026, capital levels remained characterized as "well-capitalized" under regulatory requirements in effect at the time. Additional information related to capital ratios is provided in Note 8 to the consolidated financial statements.
Table 15 - Capital Ratios
United Community Banks, Inc.
(Consolidated) 		United Community Bank
Minimum Well-
Capitalized 		Minimum Capital Plus Capital Conservation Buffer March 31,
2026 		December 31,
2025 		March 31,
2026 		December 31,
2025
Risk-based ratios:
CET1 capital 4.5 % 6.5 % 7.0 % 13.40 % 13.44 % 12.19 % 12.34 %
Tier 1 capital 6.0 8.0 8.5 13.40 13.44 12.19 12.34
Total capital 8.0 10.0 10.5 14.63 14.77 13.21 13.37
Leverage ratio 4.0 5.0 N/A 10.45 10.28 9.50 9.42
Effect of Inflation and Changing Prices
A bank's asset and liability structure is substantially different from that of an industrial firm in that primarily all assets and liabilities of a bank are monetary in nature with relatively little investment in fixed assets or inventories. 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 manage interest rate sensitivity. In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs.
Critical Accounting Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Our accounting and reporting estimates are in accordance with GAAP and conform to customary practices within the banking industry. Estimates that are susceptible to significant changes include accounting for the ACL and fair value measurements, both of which require significant judgments by management. Actual results could differ significantly from those estimates. Also, different assumptions in the application of these accounting estimates could result in material changes in our consolidated financial position or consolidated results of operations. Our critical accounting estimates are discussed in MD&A in our 2025 10-K.
UNITED COMMUNITY BANKS, INC.
Table 16 (Continued) - Financial Highlights
Non-GAAP Performance Measures Reconciliation
(dollars in thousands, except per share data)
2026 2025
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Noninterest income reconciliation
Noninterest income (GAAP) $ 43,746 $ 40,462 $ 43,219 $ 34,708 $ 35,656
Gain on terminated cash flow hedge (5,184) - - - -
Noninterest income - operating $ 38,562 $ 40,462 $ 43,219 $ 34,708 $ 35,656
Noninterest expense reconciliation
Noninterest expense (GAAP) $ 157,302 $ 152,048 $ 150,868 $ 147,919 $ 141,099
Payroll transition bonus (6,704) - - - -
FDIC special assessment accrual reversal 1,885 - - - -
Merger-related and other charges (873) (606) (3,468) (4,833) (1,297)
Noninterest expense - operating $ 151,610 $ 151,442 $ 147,400 $ 143,086 $ 139,802
Net income to operating income reconciliation
Net income (GAAP) $ 84,289 $ 86,455 $ 91,494 $ 78,733 $ 71,413
Gain on terminated cash flow hedge (5,184) - - - -
Payroll transition bonus 6,704 - - - -
FDIC special assessment accrual reversal (1,885) - - - -
Merger-related and other charges 873 606 3,468 4,833 1,297
Income tax benefit of non-operating items (113) (133) (751) (1,047) (281)
Net income - operating $ 84,684 $ 86,928 $ 94,211 $ 82,519 $ 72,429
Diluted income per common share reconciliation
Diluted income per common share (GAAP) $ 0.69 $ 0.70 $ 0.70 $ 0.63 $ 0.58
Gain on terminated cash flow hedge (0.03) - - - -
Payroll transition bonus 0.04 - - - -
FDIC special assessment accrual reversal (0.01) - - - -
Merger-related and other charges 0.01 0.01 0.02 0.03 0.01
Deemed dividend on preferred stock redemption - - 0.03 - -
Diluted income per common share - operating $ 0.70 $ 0.71 $ 0.75 $ 0.66 $ 0.59
Book value per common share reconciliation
Book value per common share (GAAP) $ 30.54 $ 30.17 $ 29.44 $ 28.89 $ 28.42
Effect of goodwill and other intangibles (7.98) (7.93) (7.85) (7.89) (7.84)
Tangible book value per common share $ 22.56 $ 22.24 $ 21.59 $ 21.00 $ 20.58
Return on tangible common equity reconciliation
Return on common equity (GAAP) 9.35 % 9.48 % 9.20 % 8.45 % 7.89 %
Gain on terminated cash flow hedge (0.45) - - - -
Payroll transition bonus 0.58 - - - -
FDIC special assessment accrual reversal (0.16) - - - -
Merger-related and other charges 0.07 0.05 0.29 0.42 0.12
Deemed dividend on preferred stock redemption - - 0.34 - -
Return on common equity - operating 9.39 9.53 9.83 8.87 8.01
Effect of goodwill and other intangibles 3.66 3.78 3.73 3.47 3.20
Return on tangible common equity - operating 13.05 % 13.31 % 13.56 % 12.34 % 11.21 %
Return on assets reconciliation
Return on assets (GAAP) 1.22 % 1.21 % 1.29 % 1.11 % 1.02 %
Gain on terminated cash flow hedge (0.06) - - - -
Payroll transition bonus 0.07 - - - -
FDIC special assessment accrual reversal (0.02) - - - -
Merger-related and other charges 0.01 0.01 0.04 0.05 0.02
Return on assets - operating 1.22 % 1.22 % 1.33 % 1.16 % 1.04 %
UNITED COMMUNITY BANKS, INC.
Table 16 (Continued) - Financial Highlights
Non-GAAP Performance Measures Reconciliation
(dollars in thousands, except per share data)
2026 2025
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Efficiency ratio reconciliation
Efficiency ratio (GAAP) 56.66 % 54.40 % 54.30 % 56.69 % 56.74 %
Gain on terminated cash flow hedge 1.03 - - - -
Payroll transition bonus (2.41) - - - -
FDIC special assessment accrual reversal 0.68 - - - -
Merger-related and other charges (0.31) (0.21) (1.25) (1.85) (0.52)
Efficiency ratio - operating 55.65 % 54.19 % 53.05 % 54.84 % 56.22 %
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP) 12.97 % 12.99 % 12.78 % 12.86 % 12.56 %
Effect of goodwill and other intangibles (3.05) (3.07) (3.07) (3.10) (3.06)
Effect of preferred equity - - - (0.31) (0.32)
Tangible common equity to tangible assets 9.92 % 9.92 % 9.71 % 9.45 % 9.18 %
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