Management's Discussion and Analysis of Financial Condition and Results of Operations
Modified Retirement Plan
United's unfunded noncontributory defined benefit pension plan
Navitas
Navitas Credit Corp.
NOW
Negotiable order of withdrawal
NPA
Nonperforming asset
NYSE
New York Stock Exchange
OCI
Other comprehensive income
OREO
Other real estate owned
Patriot Act
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
PCD
Purchased credit deteriorated loans
Progress
Progress Financial Corporation and its wholly-owned subsidiary, Progress Bank & Trust
PSU
Performance-based restricted stock unit awards with market conditions
Report
Annual Report on Form 10-K
ROU asset
Right-of-use asset
RWA
Risk-weighted assets
SBA
United States Small Business Administration
SCBFI
South Carolina Board of Financial Institutions
SEC
United States Securities and Exchange Commission
SOFR
Secured Overnight Financing Rate
Term SOFR
Forward-looking term rate based on SOFR
U.S. Treasury
United States Department of the Treasury
UCBI
United Community Banks, Inc. and its direct and indirect subsidiaries
UCMS
United Community Mortgage Services
UCPS
United Community Payment Systems, LLC
United
United Community Banks, Inc. and its direct and indirect subsidiaries
USDA
United States Department of Agriculture
VIE
Variable interest entity
Cautionary Note Regarding Forward-Looking Statements
This Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, information appearing under “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. Forward-looking statements are neither statements of historical fact nor are they assurances of future performance and generally can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “projects”, “plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”, “seeks”, “intends”, or “anticipates”, or similar expressions. Forward-looking statements include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of various transactions or events, and statements about our future performance, operations, products and services, and should be viewed with caution.
Because forward-looking statements relate to the future, they are subject to known and unknown risks, uncertainties, assumptions and changes in circumstances, many of which are beyond our control, and that are difficult to predict as to timing, extent, likelihood and degree of occurrence, and that could cause actual results to differ materially from the results implied or anticipated by the statements. Except as required by law, we do not intend to and, hereby disclaim, any obligation to update or revise any forward-looking statement contained in this Report, which speaks only as of the date of its filing with the SEC, whether as a result of new information, future events, or otherwise. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements, in addition to those described in detail under Item 1A of this Report - “Risk Factors” - include, but are not limited to the following:
• negative economic and political conditions that adversely affect the general economy, the banking sector, housing prices, the real estate market, the job market, consumer confidence, the financial condition of our borrowers and consumer spending habits, which may affect, among other things, the levels of NPAs, charge-offs and provision expense;
• changes in loan underwriting, credit review or loss policies associated with economic conditions, examination conclusions or regulatory developments;
• the potential effects of pandemics or public health conditions on the economic and business environments in which we operate, including the impact of actions taken by governmental authorities to address these conditions;
• strategic, market, operational, liquidity and interest rate risks associated with our business;
• potential fluctuations or unanticipated changes in the interest rate environment, including interest rate changes made by the Federal Reserve, replacement or reform of interest rate benchmarks, as well as cash flow reassessments may reduce net interest margin and/or the volumes and values of loans made or held as well as the value of other financial assets;
• any unanticipated or greater than anticipated adverse conditions in the national or local economies in which we operate;
• our loan concentration in industries or sectors that may experience unanticipated or greater than anticipated adverse conditions than other industries or sectors in the national or local economies in which we operate;
• the risks of expansion into new geographic or product markets;
• risks with respect to our ability to identify and complete future mergers or acquisitions as well as our ability to successfully expand and integrate those businesses and operations that we acquire;
• our ability to attract and retain key employees;
• competition from financial institutions and other financial service providers including non-bank financial technology providers and our ability to attract customers from other financial institutions;
• losses due to fraudulent and negligent conduct of our customers, third party service providers or employees;
• cybersecurity risks and the vulnerability of our network and online banking portals, and the systems or parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches that could adversely affect our business and financial performance or reputation;
• our reliance on third parties to provide key components of our business infrastructure and services required to operate our business;
• the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services market, including those accelerated by the use of artificial intelligence and machine learning;
• the availability of and access to capital, particularly if there were to be increased capital requirements or enhanced regulatory supervision;
• legislative, regulatory or accounting changes that may adversely affect us;
• volatility in the ACL resulting from the CECL methodology, either alone or as that may be affected by conditions affecting our business;
• adverse results (including judgments, costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future legislation, litigation, regulatory proceedings, examinations, investigations, or similar matters, or developments related thereto;
• government shutdowns, the effect of which could delay legislative activities or regulatory approval processes that could be harmful to our customers, business activities and strategic initiatives;
• any matter that would cause us to conclude that there was impairment of any asset, including intangible assets, such as goodwill;
• limitations on our ability to declare and pay dividends and other distributions from the Bank to the Holding Company, which could affect Holding Company liquidity, including its ability to pay dividends to shareholders or take other capital actions;
• the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as inflation or recession, terrorist activities, wars and other foreign conflicts, climate change and weather related events, disruptions in our customers’ supply chains, disruptions in transportation, essential utility outages or trade disputes and tariffs including threats thereof, either imposed by the United States or other trading partners in retaliation to United States tariffs; and
• other risks and uncertainties disclosed in documents filed or furnished by us with or to the SEC, any of which could cause actual results to differ materially from future results expressed, implied or otherwise anticipated by such forward-looking statements.
We caution readers that the foregoing list of factors is not exclusive, is not necessarily in order of importance and readers should not place undue reliance on forward-looking statements.
PART I
Unless the context otherwise requires, the terms “we,” “our,” or “us” refer to United Community Banks, Inc. and its direct and indirect subsidiaries, including United Community Bank.
ITEM 1. BUSINESS
Overview
United Community Banks, Inc., headquartered in Greenville, South Carolina, is 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, a South Carolina state-chartered bank. 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, 2025, we had consolidated total assets of $28.0 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.
Recent Developments
• On September 15, 2025, as part of our ongoing capital management strategy, we redeemed all outstanding shares of our Series I preferred stock, which had a carrying value of $88.3 million.
• During 2025, we redeemed two series of our senior debentures totaling $135 million and comprising all of our outstanding senior debt.
• On May 1, 2025, we completed the acquisition of ANB, headquartered in Oakland Park, Florida where it operated one banking location in the Fort Lauderdale metropolitan area. In the acquisition, we acquired $301 million in loans and $374 million in deposits. Our operating results for the year ended December 31, 2025 include ANB’s operating results for the period subsequent to the acquisition date.
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. This includes a variety of deposit products, secured and unsecured loans, mortgage loans, payment and commerce solutions, equipment finance services, wealth management, trust services, private banking, investment advisory services, insurance services, and other related financial services. These products and services are delivered through a variety of channels including our branches, other offices, the internet, and mobile applications.
Our business model combines the commitment to exceptional customer service of a local bank with the products and expertise of a larger institution. We have a strong culture focused on what we call “The Golden Rule of Banking” – treating each other and our customers the way we would want to be treated. We exist to serve our customers, and we are committed to making lives better through outstanding products, dedication to our customers, and serving the communities in which we operate.
We operate as a locally-focused community bank, supplemented by experienced, centralized support to deliver products and services to our larger, more sophisticated, customers. Our organizational structure reflects these strengths, with local leaders for each market and market advisory boards operating in partnership with the product experts of our Commercial Banking Solutions unit. We believe that this combination of service and expertise sets us apart and is instrumental in our strategy to build long-term relationships.
In 2025, we became an 11-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. Also in 2025, we earned five Greenwich Best Brand Awards, including national honors for middle market satisfaction. Forbes has also consistently listed us as one of the World’s Best Banks and one of America’s Best Banks.
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, 2025 were $19.4 billion, or 69% of total consolidated assets. The interest rates that we charge on loans vary with the degree of risk, maturity and amount of the loan and are further subject to competitive pressures, deposit costs, availability of funds and government regulations.
The most significant categories of our loans are those to finance owner occupied CRE, commercial income producing 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 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 seasonal residences in our market areas. 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. During 2025, the Bank originated $1.02 billion in residential mortgage loans for the purchase of homes and to refinance existing mortgage debt. Approximately 65% 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.
For additional information regarding our lending activity, see the section captioned “Credit Risk Management” in Part II, Item 7. MD&A of this Report.
Deposit Activities
Deposits are the major source of our funds for lending and other investment activities. We offer our customers a variety of deposit products, including checking accounts, savings accounts, money market accounts and other deposit accounts. Generally, we attempt to maintain the rates paid on our deposits at a competitive level. We generate the majority of our deposits from customers in our local markets. For additional information regarding our deposit accounts, see the section captioned “Deposits” in Part II, Item 7. MD&A of this Report.
Investments
We use our investment portfolio to provide for the investment of excess funds at acceptable risk levels while providing liquidity to fund loan demand or to offset fluctuations in deposits. Our portfolio consists primarily of residential and commercial mortgage-backed securities, asset-backed securities, U.S. Treasury, U.S. agency and municipal obligations. Our AFS securities are recorded at fair value on our balance sheet. Changes in fair value on AFS securities are generally recorded in shareholders’ equity and are not recognized in our income statement. Our securities classified as HTM are recorded at amortized cost.
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 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 sell non-deposit investment products and insurance products, including life insurance, long-term care insurance and tax-deferred annuities, to our customers. We have an affiliation with a third-party broker/dealer, LPL Financial, to facilitate this line of business.
Reinsurance and Merchant Services
Through NLFC Reinsurance Corp., we provide reinsurance on property insurance contracts covering equipment financed by the Bank’s equipment financing business.
We provide payment processing services for our commercial and small business customers through UCPS, which 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, 2025 are listed in Exhibit 21 to this Report. 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.
Strategic Transactions - Acquisitions and Expansion
An element of our business strategy is to consider opportunities to expand into or enhance our presence in attractive markets in which we believe our operating model will be successful. 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. We generally seek acquisition partners that share a similar culture and commitment to customer service. Acquisitions typically involve the payment of a premium over book and market values and, therefore, some dilution to our book value may occur with any future transactions. Our goal is to achieve an attractive return on investment, as well as maintain a reasonable earn-back period of any tangible book value dilution, using realistic growth and expense reduction assumptions. Our ability to engage in any potential acquisition is also subject to review by and approval of various bank regulatory authorities.
Client Concentration
Neither we nor any of our significant subsidiaries is dependent upon a single client or very few clients.
Calendar-Year Seasonality
Seasonality does not affect us in any material way; however, we do experience seasonal variation in certain areas of our business that affects revenues, expenses, balance sheet accounts and credit trends. Our commercial lending businesses (including SBA and equipment finance) tend to be seasonally weaker in the first quarter and seasonally stronger in the fourth quarter. Our mortgage business tends to be seasonally strong in the second and third quarters correlating with home buying trends. In addition, our government deposit balances tend to be strongest in the third and fourth quarters correlating with their tax receipts.
Cyclicality
Banking
Financial services facilitate commercial and consumer economic activities in critical ways. As a result, in many ways, the performance of the financial services industry tends to reflect that of the economies it serves. As a result, our banking business is broadly and strongly dependent on the size and strength of the U.S. economy. Generally, when the U.S. economy is in an expansionary phase of the business cycle, we experience loan growth, income from lending tends to rise (assuming static interest rates), credit losses tend to fall, and fee income tends to increase. In a contracting phase, those patterns tend to reverse. The impact of those factors on our operating results can be substantial, especially if they consistently move up or down at the same time.
Our banking business is highly dependent on the level of interest rates, whether federal monetary policy is easing or tightening, and on the shape of the interest rate yield curve. These factors also are cyclical, and are related in complex ways with the business cycle mentioned above.
These factors, and their impacts on us, often are mixed rather than consistently positive or negative. For example, low interest rates reduce the interest income we earn, reduce our costs of funding, tend to stimulate economic activity and loan growth, and, through lower debt service, tend to ease financial pressure on clients, reducing default risk. 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 short-term rates in response to, or to avoid, a weakening economy. 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 Risks , and Interest Rate and Yield Curve Risks.
Mortgage Origination and Related Services
Mortgage lending activity is strongly linked to economic strength and interest rate cycles. Activity tends to be inversely related to prevailing mortgage rates: when rates are high, home-buying and refinancing decrease, and when rates are low, home-buying and refinancing increase. Moreover, expectations about near-term future mortgage rates can accelerate or delay those impacts, as borrowers rush to avoid future rate increases or wait for future rate decreases.
Human Resources Management
Workforce Overview
As of December 31, 2025, we employed 3,070 full-time equivalent employees compared to 2,979 as of December 31, 2024. None of our employees are covered by union representation, collective bargaining agreements or similar arrangements. During 2025, we did not experience any labor disputes or work stoppages related to organized labor activities.
Our team is unified by our guiding principle, “The Golden Rule of Banking” – treating colleagues and customers as we ourselves wish to be treated. We believe that building and maintaining customer trust and delivering outstanding service are rooted in our company culture, which thrives on the dedication and engagement of our employees. Engaged employees consistently go above and beyond for our customers. We embrace a community banking approach, empowering employees to make decisions locally, while providing them with comprehensive products, services, and centralized support typically found at larger institutions. Our commitment is to attract, reward and retain talented individuals who share our customer-centric values, foster opportunities for professional growth and advancement and ensure our organization remains an exceptional place to work.
Oversight and Management
Our Board, through its Talent and Compensation Committee, oversees our human capital strategy, including compensation philosophy, short and long-term incentive programs and succession planning. Our Human Resources, Legal and Compliance functions are responsible for developing and implementing labor and human capital policies, identifying potential risks, and executing risk mitigation strategies under Board oversight. At the management level, our Employee Retirement Plan Committee administers our 401(k) retirement program, while our Incentive Compensation Committee oversees non-executive incentive compensation plans and evaluates associated risks.
Compensation and Benefits
We offer competitive compensation and benefits designed to attract, retain, motivate and reward employees for aligning our products with our customers’ needs within our established risk parameters. Our benefits portfolio includes comprehensive group health plans - medical, prescription drug, dental and vision coverage - as well as disability and life insurance. Employees have access to health care savings accounts, enabling them to set aside pre-tax dollars for medical and dependent care expenses. Eligibility to participate in our 401(k) Retirement Plan begins the first of the month following employment with a company match up to 5% of pay available after 90 days of service.
Talent Development
We invest in talent development, through programs such as our Manager Development Program, which provides ongoing education led by our internal experts and subject matter specialists. Continuous learning is a core expectation, ensuring employees remain current with industry knowledge, skills and systems.
To support and develop emerging leaders, we offer our Leadership Academy and Advanced Leadership programs, which are multi-month programs for select employees who demonstrate next-generation leadership potential. Participants engage in strategic projects, leadership and business development sessions and receive mentorship from executive and senior leaders. This initiative is designed to deepen participants’ understanding of our culture, expand their skills and provide opportunities to contribute strategically to our organization.
Through memberships with the American Bankers Association, the Risk Management Association, the Mid-Size Bank Coalition of America, and state banking associations, our employees benefit from access to resources, online training, conferences, and professional discussion groups. We encourage participation in these opportunities for skill enhancement, leadership development and industry engagement. Many employees actively contribute to these organizations through leadership roles, forums, task forces and working groups.
Culture and Belonging
We are committed to cultivating an open, supportive workplace where employees can grow professionally and realize their full potential. We foster a culture that encourages employees to share ideas and express opinions, promoting continuous improvement for our organization and our customers. We strive to maintain an environment where all employees feel welcomed and supported, believing that embracing varying perspectives leads to innovative solutions for our clients in an evolving marketplace.
Our “Power of U” advisory group facilitates two-way communication across the organization, enhancing belonging, recognition and engagement. This group provides alternative channels for employees at all levels to share ideas, suggestions and concerns directly with senior leadership.
Employee Engagement
We are honored to have been named one of American Banker’s “Best Banks to Work For” in 2025, an accolade we have received for nine consecutive years.
This recognition reflects our belief that an engaged workforce is fundamental to our continued success, and we attribute our standing to our commitment to listening and responding to employee feedback. We regularly conduct employee engagement surveys, administered by a third party, to gather feedback from our workforce across our organization. These surveys solicit input on topics such as company strategy, customer focus, operations, roles and responsibilities, competitiveness of compensation and benefits, work environment and overall engagement. The survey combines quantitative ratings with open-ended feedback.
Survey results are reviewed by executive management and the Board, who analyze feedback to identify areas of strength and opportunities for improvement. Action plans are developed in collaboration with cross-functional teams to address key findings. We communicate the survey outcomes and planned changes to employees, reinforcing our commitment to enhancing the employee experience and maintaining our status as an employer of choice.
Supporting our communities remains a strategic priority. We recognize that employees value working for organizations that give back and we believe in the power of collective action for positive impact. Our “Together for Good Council,” comprised of employees who coordinate volunteer initiatives, charitable giving and our “Good Days” of service, continues to drive our community engagement and involvement.
Competition
Our profitability depends principally on our ability to effectively compete in the markets in which we conduct business. We experience strong competition in all aspects of the businesses in which we engage from both bank and non-bank competitors. Broadly speaking, we compete with national banks, super-regional banks, smaller community banks, credit unions, non-traditional internet-based banks and insurance companies and agencies. We also compete with other financial intermediaries and investment alternatives such as mortgage companies, credit card issuers, leasing companies, finance companies, money market mutual funds, brokerage firms, governmental and corporate bond issuers, and other securities firms. Many of these non-bank competitors are not subject to the same regulatory oversight, which can provide them with a competitive advantage in some instances. In many cases, our competitors have substantially greater resources and offer certain services that we are unable to provide to our customers.
We encounter strong pricing competition in providing our services, particularly in making loans and attracting deposits. The larger national and super-regional banks may have significantly greater lending limits and may offer additional products. We attempt to
compete successfully with our competitors, regardless of their size, by emphasizing customer service while continuing to provide a wide variety of services.
We expect competition in the industry to continue to increase mainly as a result of the improvement in financial technology used by both existing and new banking and financial services firms. Competition may further intensify as additional companies (both banks and non-banks) enter the markets where we conduct business, competitors combine to present more formidable challengers, and we enter mature markets in accordance with our expansion strategy.
Supervision and Regulation
Scope of this Section
This section describes certain material aspects of the regulatory framework applicable to banks and financial holding companies and their subsidiaries and to companies engaged in insurance activities. To the extent that the following information describes statutory or regulatory provisions, it is qualified in its entirety by express reference to each of the particular statutory and regulatory provisions, and you should refer to the full text of the statutes, regulations, and corresponding guidance for more information. These statutes and regulations are subject to change, and additional statutes, regulations, and corresponding guidance may be adopted. Additionally, the current federal administration is implementing a regulatory reform agenda that is significantly different than that of the prior administration, which affects the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. It is premature, however, for us to be able to predict the nature of these reforms or the effects, if any, that these reforms 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.
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). 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.
The Holding Company being a financial holding company allows for engagement in a broader range of financial activities. A bank holding company that is not a financial holding company is limited to engaging in “banking” and activities found by the Federal Reserve to be “closely related to banking.” Eligible bank holding companies that elect to become financial holding companies may affiliate with securities firms and insurance companies and engage in activities that are “financial in nature.” “Financial” activities are broader in scope than those which are “closely related to bankin g.” See Financial Activities other than Banking in this Item.
The BHC Act requires every bank holding company to obtain the Federal Reserve’s prior approval before (1) acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank that it does not already control; (2) acquiring all or substantially all of the assets of a bank; and (3) subject to certain exceptions, merging or consolidating with any other bank holding company. In addition, a bank holding company is generally prohibited from engaging in, or acquiring a direct or indirect interest in or control of more than 5% of the voting shares of any company engaged in non-banking activities. This prohibition does not apply to activities listed in the BHC Act or found by the Federal Reserve, by order or regulation, to be closely related to banking or managing or controlling banks as to be a proper incident thereto. The Federal Reserve also may approve an application by a bank holding company to acquire a bank located outside the acquirer’s principal state of operations without regard to whether the transaction is prohibited under state law, although state law may still impose certain requireme nts. See Interstate Branching and Mergers in this Item for further information.
The Holding Company is an “affiliate” of the Bank under the Federal Reserve Act, which imposes certain restrictions on (1) loans by the Bank to the Holding Company, (2) investments in the stock or securities of the Holding Company by the Bank, (3) the Bank taking the stock or securities of an “affiliate” as collateral for loans by the Bank to a borrower and (4) the purchase of assets from the Holding Company by the Bank. Further, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of property or furnishing of services. See Transactions with Affiliates discussed below .
The Bank
Our most significant subsidiary, United Community Bank, is subject to the regulation and supervision of, and to examination by, t he SCBFI. In addition to general supervision and examination powers, the SCBFI has the power to approve mergers with the Bank, the Bank’s issuance of preferred stock or capital notes, the establishment of branches, and many other corporate actions. We are not required to obtain the approval of the SCBFI prior to acquiring the capital stock of a national bank, but we must notify them at least 15 days prior to doing so. We must receive the SCBFI’s approval prior to engaging in the acquisition of a South Carolina state-chartered bank or another South Carolina bank holding company.
The Bank is subject to examination and reporting requirements of the Federal Reserve, FDIC, the SCBFI and the CFPB. During 2024, the Bank changed its primary federal regulator from the FDIC to the Federal Reserve. The Bank is insured by the FDIC and is subject to regulation by the Federal Reserve and, in certain respects, by the CFPB. The Bank is also subject to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be made and the interest that may be charged, limitations on the types of investments that may be made, activities that may be engaged in, and types of services that may be offered. Various consumer laws and regulations also affect the operations of the Bank.
In addition to the impact of regulation, commercial banks are affected significantly by the actions of the Federal Reserve as it attempts to control money supply and credit availability in order to influence the economy. Also, the Bank and certain of its affiliates are prohibited from engaging in certain tie-in arrangements in connection with extensions of credit, leases or sales of property, or furnishing products or services.
Payment of Dividends
The Holding Company, incorporated in Georgia, is a legal entity separate and distinct from the Bank and other subsidiaries. The Holding Company’s principal source of cash flow, including cash flow to pay dividends on our common stock or to pay principal and interest on debt securities, is dividends paid to it by the Bank. 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.
During 2025, 2024, and 2023, the Bank paid dividends to the Holding Company of $356 million, $153 million and $198 million, respectively. The Holding Company declared quarterly cash dividends on its common stock in 2025, 2024, and 2023 totaling $0.98, $0.94 and $0.92 per share, respectively.
The Holding Company
Under Georgia corporate law, we may not pay cash dividends if, after giving effect to such payment, we would not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus any amounts needed to satisfy any preferential rights if we were dissolving. In addition, in deciding whether or not to declare a dividend of any particular size, our Board must consider our current and prospective capital, liquidity, and other needs, including the needs of the Bank which we are obligated to support.
The Federal Reserve has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the Federal Reserve’s view that a bank holding company generally should pay cash dividends only to the extent that the holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the holding company’s capital needs, asset quality, and overall financial condition. The Federal Reserve has also indicated that a bank holding company should not maintain a level of cash dividends that places undue pressure on the capital of its bank subsidiaries, or that can be funded only through additional borrowings or other arrangements that undermine the bank holding company’s ability to be a source of strength to its bank subsidiaries. The Holding Company and the Bank must also maintain the CET1 capital conservation buffer of 2.5% to avoid becoming subject to restrictions on capital distributions, including dividends, as described below under Capital Adequacy - Basel III Capital Standards .
The Bank
As a South Carolina state-chartered bank, the Bank is permitted to pay a dividend of up to 100% of its current year earnings without requesting approval of the SCBFI, provided certain conditions are met. All other cash dividends require approval of the SCBFI. As a Federal Reserve member bank, the Bank is permitted to pay a dividend to the Holding Company of up to the sum of current year and the previous two years undistributed income without requesting approval of the Federal Reserve, which is less restrictive than the requirements of the SCBFI.
Other Factors Affecting Dividends
If, in the opinion of the applicable regulatory authority, the Holding Company or the Bank is engaged in or about to engage in an unsafe or unsound practice (which, depending on the financial condition of the Holding Company or the Bank, could include the payment of dividends), such authority may require us or the Bank to cease and desist from that practice. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s or holding company’s capital base to an inadequate level would be an unsafe and unsound banking practice.
In addition, under the Federal Deposit Insurance Act, an FDIC-insured depository institution (such as the Bank) may not make any capital distributions, pay any management fees to its holding company, or pay any dividend if it is undercapitalized or if such payment would cause it to become undercapitalized.
The payment of dividends by the Holding Company and the Bank may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines imposed by regulators or debt covenants. For example, as discussed under Capital Adequacy below, our ability to pay dividends would be restricted if our capital ratios fell below minimum regulatory requirements plus a capital conservation buffer.
The Federal Reserve generally requires bank holding companies to pay dividends only out of current operating earnings. 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.
Transactions with Affiliates
Federal banking laws restrict transactions between a bank and its affiliates, including a parent bank holding company. 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. These restrictions also require that credit transactions with affiliates be collateralized and that transactions with affiliates must be on terms substantially the same, or at least as favorable, as those prevailing at the time for comparable transactions with or involving nonaffiliates. In the absence of such comparable transactions, any transaction between banks and their affiliates must be on terms and under circumstances, including credit standards, which in good faith would be offered to or would apply to nonaffiliates. Generally, a bank’s covered transactions with any one affiliate are limited to 10% of the bank’s capital stock and surplus and covered transactions with all affiliates are limited to 20% of the bank’s capital stock and surplus. The Dodd-Frank Act expanded the scope of these regulations, including by applying them to the credit exposure arising under derivative transactions, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions. Federal banking laws also place similar restrictions on loans and other extensions of credit by FDIC-insured banks, such as the Bank, and their subsidiaries to their directors, executive officers, and principal shareholders.
Capital Adequacy
Banks and bank holding companies are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines involve quantitative measures of assets, liabilities and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors.
Basel III Capital Standards
Federal financial industry regulators require that regulated financial institutions, including the Holding Company and the Bank, maintain minimum capital levels. The capital requirements in the United States are based on international standards known as “Basel III.”, which require the following:
Ratio Description
Minimum Capital
Minimum Capital Plus Capital Conservation Buffer
Risk-based ratios:
CET1 capital
Common Equity Tier 1 Capital to RWA
Tier 1 capital
Tier 1 Capital to RWA
Total capital
Total Capital to RWA
Leverage ratio
Tier 1 Capital divided by quarterly average assets net of goodwill, certain other intangible assets, and certain required deduction items
Tier 1 capital includes two components: CET1 capital and additional Tier 1 capital. The highest form of capital, CET1 capital, consists of common shareholders’ equity, excluding AOCI, intangible assets, net of associated net deferred tax liabilities, and disallowed deferred tax assets. Additional Tier 1 capital includes non-cumulative perpetual preferred stock.
Tier 2 capital includes the allowable portion of the ACL up to 1.25% of RWA as well as qualifying subordinated debt and trust preferred securities.
In addition, a banking organization must maintain a 2.5% capital conservation buffer on top of its minimum risk-based capital requirements in order to avoid restrictions on capital distributions or discretionary bonus payments to executives. This buffer must consist solely of CET1 capital, but the buffer applies to all three risk-based measurements (CET1 capital, Tier 1 capital and total capital).
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.
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.
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.
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, 2025, the Bank qualified as “well-capitalized” under the regulatory capital requirements discussed above. An institution may be deemed to be in a capitalization category that is lower than is indicated by its actual capital position if it receives an unsatisfactory examination rating. Institutions generally are not allowed to publicly disclose examination results.
Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. 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. 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.
Holding Company Structure and Support of Subsidiary Banks
Because we are a holding company, our right to participate in the assets of any subsidiary upon the latter’s liquidation or reorganization will be subject to the prior claims of the subsidiary’s creditors (including depositors in the case of the Bank) except to the extent that we may be a creditor with recognized claims against the subsidiary. In addition, depositors of a bank, and the FDIC as their subrogee, would be entitled to priority over the other creditors in the event of liquidation of the bank.
Under Federal Reserve policy we are expected to be a source of financial strength to, and to commit resources to support, the Bank. This support may be required at times even if, absent such Federal Reserve policy, we neither wish nor do we have the resources to provide it. In addition, any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of the subsidiary bank. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment.
Consumer Protection Laws
In connection with its lending activities, the Bank is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of the economy and population. These 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.
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.
CFPB
The CFPB 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. The CFPB has examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets, including the Bank. The CFPB has authority to prevent unfair, deceptive or abusive practices in connection with the offering of consumer financial products.
The CFPB has issued a number of regulations related to the origination of mortgages, foreclosures, and overdrafts as well as many other consumer issues. Additionally, the CFPB has proposed, or may propose, additional regulations or modifications to existing regulations that directly relate to our business. Although the future authority of the CFPB is not clear under the current administration, if adopted, new CFPB regulations, and changes to CFPB regulations and enforcement priorities, could 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. As a result, the Bank must pay deposit insurance assessments to the FDIC. The FDIC imposes a risk-based deposit premium assessment system to determine assessments based on a number of factors to measure the risk each institution poses to the Deposit Insurance Fund. The assessment rate is applied to our total average assets less tangible equity. Under the current system, premiums are assessed quarterly and could increase if, for example, criticized loans and/or other higher risk assets increase or balance sheet liquidity decreases.
Because the Bank exceeds $10 billion in assets, the FDIC uses a “scorecard” system to calculate our assessments. Key factors include: the institution’s risk category; whether the institution is deemed large and highly complex; whether the institution qualifies for an unsecured debt adjustment; and whether the institution is burdened with a brokered deposit adjustment. Other factors can impact the base against which the applicable rate is applied, including (for example) whether a net loss is realized. The FDIC also has the ability to make discretionary adjustments to the total score based upon significant risk factors that are not adequately captured in the calculations.
In the event of a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC, the FDIC may terminate deposit insurance.
Interchange Fee Restrictions
We are subject to regulations that cap interchange fees which the Bank may charge merchants for debit card transactions. These restrictions were required by a statutory provision known as the Durbin Amendment of the Dodd-Frank Act. The Federal Reserve’s final rules implementing the Durbin Amendment capped interchange fees for debit card transactions at $0.21 plus five basis points in order to be eligible for a safe harbor such that the fee is conclusively determined to be reasonable and proportionate. Another related rule also permits an additional $0.01 per transaction “fraud prevention adjustment” to the interchange fee if certain Federal Reserve standards are implemented, including an annual review of fraud prevention policies and procedures. With respect to network exclusivity and merchant routing restrictions, all debit cards must now participate in at least two unaffiliated networks so that the transactions initiated using those debit cards will have at least two independent routing channels.
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. The Incentive Compensation Guidance, which covers all employees who have the ability to materially affect the risk profile of an institution, either individually or as part of a group, is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the institution’s ability to effectively identify and manage risks, (ii) be compatible with effective internal controls and risk management and (iii) be supported by strong corporate governance, including active and effective oversight by the institution’s board of directors. W e operate a risk management process for assessing risk in incentive compensation plans.
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 findings of the supervisory initiatives are included in reports of examination. Deficiencies are incorporated into the financial institution’s supervisory ratings, which can affect the institution’s ability to make acquisitions and take other actions. Enforcement actions may be taken against a financial institution if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the institution’s safety and soundness and the institution is not taking prompt and effective measures to correct the deficiencies.
The scope and content of federal bank regulatory agencies’ policies on executive compensation are continuing to develop and are likely to continue evolving in the future.
Real Estate Lending
Inter-agency guidelines adopted by federal bank regulatory agencies mandate that financial institutions establish real estate lending policies with maximum allowable real estate loan-to-value limits, subject to an allowable amount of non-conforming loans as a
percentage of capital. 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.
Cross-Guarantee Liability
A depository institution insured by the FDIC can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with (i) the default of a commonly controlled FDIC-insured depository institution or (ii) any assistance provided by the FDIC to any commonly controlled FDIC-insured depository institution “in danger of default.” “Default” is defined generally as the appointment of a conservator or receiver and “in danger of default” is defined generally as the existence of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance. Any FDIC damage claim is superior to claims of shareholders of the insured depository institution or its holding company but is subordinate to claims of depositors, secured creditors, and holders of subordinated debt (other than affiliates) of the commonly controlled insured depository institution. Currently the Bank is our only depository institution subsidiary. If we were to own or operate another depository institution, any by the FDIC in respect of one subsidiary bank would likely result in assertion of the cross-guarantee provisions, the assessment of estimated our other subsidiary bank(s), and a potential of our investment in our subsidiary banks.
Interstate Branching and Mergers
As previously mentioned, the Bank generally must have SCBFI’s approval to establish a new branch. For a new branch located outside of South Carolina, South Carolina law requires the Bank to comply with branching laws applicable to the state where the new branch will be located. Federal law allows the Bank to establish or acquire a branch in another state to the same extent as a bank chartered in that other state would be allowed to establish or acquire a branch in South Carolina.
For an interstate merger or acquisition: the acquiring bank must be well-capitalized and well-managed; concentration limits on liabilities and deposits may not be exceeded; regulators must assess the transaction for incremental systemic risk; and the acquiring bank must have at least “satisfactory” standing under the federal Community Reinvestment Act (discussed immediately below). 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.
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. The Bank’s low- and moderate-income community operations and activities traditionally are critical focal points in those assessments.
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. In its most recent CRA examination, the Bank received a “Satisfactory” rating.
Financial Activities other than Banking
Permitted Activities. Under the BHC Act, a bank holding company is generally permitted to engage in, or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in, the following activities:
• banking or managing or controlling banks;
• furnishing services to or performing services for our subsidiaries; and
• any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.
Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include:
• factoring accounts receivable;
• making, acquiring, brokering or servicing loans and usual related activities;
• leasing personal or real property;
• operating a non-bank depository institution, such as a savings association;
• trust company functions;
• financial and investment advisory activities;
• conducting discount securities brokerage activities;
• underwriting and dealing in government obligations and money market instruments;
• providing specified management consulting and counseling activities;
• performing selected data processing services and support services;
• acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and
• performing selected insurance underwriting activities.
Federal law generally allows financial holding companies broad authority to engage in activities that are financial in nature or incidental to a financial activity. These include: insurance underwriting and brokerage; merchant banking; securities underwriting, dealing, and market-making; real estate development; and such additional activities as the Federal Reserve in consultation with the Secretary of the Treasury determines to be financial in nature or incidental. A bank holding company may engage in these activities directly or through subsidiaries by qualifying as a “financial holding company.” To qualify as a financial holding company, a bank holding company must file an initial declaration with the Federal Reserve, certifying that all of its subsidiary depository institutions are well-managed and well-capitalized.
Federal law also permits banks to engage in certain of these activities through financial subsidiaries. To control or hold an interest in a financial subsidiary, a bank must meet the following requirements:
• The bank must receive approval from its primary federal regulator for the financial subsidiary to engage in the activities.
• The bank and its depository institution affiliates must each be well-capitalized and well-managed.
• The aggregate consolidated total assets of all of the bank’s financial subsidiaries must not exceed the lesser of: 45% of the bank’s consolidated total assets; or $50 billion (subject to indexing for inflation).
• The bank must have in place adequate policies and procedures to identify and manage financial and operational risks and to preserve the separate identities and limited liability of the bank and the financial subsidiary.
• If the bank is among the 100 largest banks, the bank must meet the long-term debt rating or alternative standards adopted by the Federal Reserve and the U.S. Secretary of the Treasury from time to time. 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.
No new activity may be commenced unless the bank and all of its depository institution affiliates have at least “Satisfactory” CRA ratings. 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.
As of December 31, 2025, we are a financial holding company and we have one financial subsidiary other than the Bank, 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. These guidelines require each financial institution, under the supervision and ongoing oversight of its board of directors or an appropriate committee thereof, to create, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, protect against any anticipated threats or hazards to the security or integrity of such information and protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer. In addition, various federal regulators, including the Federal Reserve and the SEC, have increased their focus on cyber-security through guidance, examinations and regulations. The Bank has adopted a customer information security program that has been approved by its Board.
The GLB Act requires financial institutions to implement policies regarding the disclosure of non-public personal information about consumers to nonaffiliated third parties. In general, the statute requires explanations to consumers on policies and procedures regarding the disclosure of such nonpublic information and, except as otherwise required by law, prohibits disclosing such information except as provided in a banking subsidiary’s policies and procedures. The Bank has implemented a privacy policy.
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. Moreover, these laws, and proposed legislation, are still subject to revision or formal guidance and they may be interpreted or applied in a manner inconsistent with our understanding.
Like other lenders, the Bank and our other subsidiaries use credit bureau data in their underwriting activities. Use of such data is regulated under the Fair Credit Reporting Act, which regulates the reporting of information to credit bureaus, prescreening individuals for credit offers, sharing of information between affiliates, and using affiliate data for marketing purposes. Similar state laws may impose additional requirements on the Bank and its subsidiaries.
Anti-Money Laundering Initiatives, the USA Patriot Act and the Office of Foreign Asset Control
We are subject to federal laws that are designed to combat terrorist financing, money laundering and transactions with persons, companies or foreign governments sanctioned by the United States. These include the Bank Secrecy Act, the Money Laundering Control Act, the International Emergency Economic Powers Act and the Trading with the Enemy Act, as administered by the United States Treasury Department’s Office of Foreign Assets Control. These regulations obligate depositary institutions to verify the identity of their customers, conduct customer due diligence, report on suspicious activity, file reports of transactions in currency and conduct enhanced due diligence on certain accounts. They also prohibit U.S. persons from engaging in transactions with certain designated restricted countries and persons. Depository institutions are required by their federal regulators to maintain robust policies and procedures in order to ensure compliance with these obligations.
Failure of a financial institution to maintain and implement adequate programs to combat terrorist financing, or to comply with all of the relevant laws or regulations, can lead to significant monetary penalties and could have other serious legal and reputational consequences for the institution. Federal regulators evaluate the effectiveness of an applicant in combating money laundering when determining whether to approve a proposed bank merger, acquisition, restructuring, or other expansionary activity. There have been a number of significant enforcement actions by regulators, as well as state attorneys general and the Department of Justice, against banks 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.
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.
Insurance Activities
Certain of our subsidiaries sell various types of insurance as agent in a number of states. Insurance activities are subject to regulation by the states in which such business is transacted. Although most of such regulation focuses on insurance companies and their insurance products, insurance agents and their activities are also subject to regulation by the states, including, among other things, licensing and marketing and sales practices.
Other Proposals
Federal and state legislators as well as regulatory agencies may introduce or enact new laws and rules, or amend existing laws and rules that may affect the regulation of United and its subsidiaries in substantial and unpredictable ways, and, if enacted, could increase or decrease the cost of doing business, limit or expand permissible activities or affect the industry’s competitive balance. We are not able to predict what, if any, legislative and regulatory changes affecting financial institutions will be enacted or implemented in the future, nor the impact that those actions will have upon us. Any such changes, however, could materially and adversely affect our business, financial condition and results of operations.
Source and Availability of Funds
Our revenue is primarily derived from interest on and fees received in connection with the loans we make and from interest and dividends from our investment securities and short-term investments. The principal sources of funds for our lending activities are customer deposits, repayment of loans, and the sale and maturity of investment securities. Our principal expenses are interest paid on deposits and other borrowings and operating and general administrative expenses.
Available Information
Our internet website address is www.ucbi.com. We file with or furnish to the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, proxy statements and annual reports to shareholders and, from time to time, registration statements and other documents. These documents are available free of charge to the public on or through the “Investor Relations” section of our website as soon as reasonably practicable after we electronically file them with or furnish them to the SEC. The SEC maintains an internet site that contains reports, proxy and information statements and other information that we file electronically with, or furnish to, the SEC. The address of that website is www.sec.gov. The information on any website referenced in this Report is not incorporated by reference into, and is not a part of this Report. Further, our references to website URLs are intended to be inactive textual references only.
ITEM 1A. RISK FACTORS
This Item outlines specific risks that could affect the ability of our various businesses to compete, change our risk profile or materially affect our financial condition or results of operations. Our operating environment continues to evolve and new risks continue to emerge. To address that challenge we have a risk management governance structure that oversees processes for monitoring evolving risks and oversees various initiatives designed to manage and control our potential exposure. 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. 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.
Although our strategy is expected to evolve as business conditions change, our current strategy is to continue to invest resources in expanding 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. 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.
Failure to achieve one or more key elements needed for successful business acquisitions (including the integration of those businesses) could adversely affect our business and earnings.
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. These risks include, without limitation, our inability to do one or more of 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 necessary 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 of any businesses that we acquire.
Failure to achieve one or more key elements needed for successful organic growth could adversely affect our business and earnings.
There are a number of risks to the successful execution of our organic growth strategy that could result in a material and adverse effect upon our results of operation and financial condition. 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;
• 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 and retain adequate bankers, 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.
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. 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. 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.
We may face a competitive disadvantage as a result of our relatively 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. 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. Although we compete by concentrating marketing efforts in our primary markets with local advertisements, personal contacts and greater flexibility and responsiveness in working with local customers, customer loyalty can be easily influenced by a competitor’s new products and our strategy may or may not continue to be successful. Failures in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and which, in turn, could have a material effect on our business, financial condition and results of operations.
Failure to keep pace with technological changes could adversely affect our business.
The financial services industry has undergone and continues to undergo rapid change as a result of frequent new technological innovations, such as artificial intelligence and machine learning. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements. If we are unable to provide enhancements and new features and integrations for our existing platform, develop new products that achieve market acceptance, or quickly enough to keep pace with these rapid technological developments, our business could be .
Our traditional approach to customer service, which is highly effective when executed in a physical branch with in-person interactions, may be less effective as customer habits and preferences evolve.
Physical branch utilization has been in decline throughout the industry for many years. 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. This competitive risk is especially pronounced from the largest U.S. banks and online-only banks, due in part to the investments they are able to sustain in their digital platforms. While 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.
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.
Recent technologies that have been integrated into the existing financial and banking systems, such as artificial intelligence, machine learning and continued development of smartphone applications have also been utilized by non-bank competitors, which has siphoned a portion of the revenues from those services away from banks and disrupting traditional 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. 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. The rapid growth of stablecoins, accelerated by regulatory frameworks like the Genius Act, has raised important questions about their impact on traditional banking. As these digital tokens gain mainstream acceptance, they could fundamentally reshape the structure and functions of banking and influence the established intermediation role of banks. Our success in the competitive environment in which we operate requires consistent investment of capital and human resources in innovation, particularly in light of the current fintech environment, in which the financial services industry is undergoing rapid technological changes and financial institutions are investing significantly in evaluating new technologies, such as artificial intelligence, machine learning, blockchain and other distributed ledger technologies, and developing potentially industry-changing new products, services and industry standards. Our investment is directed at generating new products and services, and adapting existing products and services to the evolving standards and demands of the marketplace. Among other things, investing in helps us maintain a mix of products and services that keeps pace with our competitors and acceptable margins.
OPERATIONAL RISKS
Fraud is a major, and increasing, operational risk for financial institutions.
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. In addition to cybersecurity risk (discussed below), new technologies have made it easier for bad actors to obtain and use client personal information, mimic signatures and otherwise create false documents that look genuine. The industry fraud threat continues to evolve, including but not limited to card fraud, check fraud, social engineering and phishing attacks for identity theft and account takeover. Additionally, the use of artificial intelligence and quantum computing could exacerbate many of these risks. Our anti-fraud measures are both preventive and, when necessary, responsive; however, some level of is , and the risk of a major cannot be eliminated.
Our ability to conduct and grow our businesses depends in part upon our ability to create, maintain, expand, and evolve an appropriate operational and organizational infrastructure, manage expenses, and recruit and retain personnel with the ability to manage a complex business.
Operational risk can arise in many ways, including: errors related to failed or inadequate physical, operational, information technology, or other processes; faulty or disabled computer or other technology systems; fraud, theft, physical security breaches, electronic data and related security breaches, or other criminal conduct by associates or third parties; and exposure to other external events. Inadequacies may present themselves in myriad ways. Actions taken to manage one risk may be ineffective against others. For example, information technology systems may be sufficiently redundant to withstand a fire, incursion, malware, or other major casualty, but they may be insufficiently adaptable to new business conditions or opportunities. Efforts to make systems more robust may make them less adaptable, and vice-versa. Also, our effort to maximize operating leverage, which is a significant priority for us, increases our operational as we strive to maintain high quality client service and compliance.
A serious information technology security (cybersecurity) breach can cause significant damage and may be difficult to detect even after it occurs.
Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks as well as through the internet and mobile technologies. Although we take protective measures and endeavor to modify these systems as circumstances warrant, the advances in technology increase the risk of information security breaches. We provide our customers the ability to bank remotely, including over the internet or through their mobile device. The secure transmission of confidential information is a critical element of remote and mobile banking. Any failure, interruption or breach in security of these systems could result in disruptions to our accounting, deposit, loan and other systems, and adversely affect our customer relationships.
There have been increasing efforts on the part of third parties, including through cyberattacks, to breach data security at financial institutions or with respect to financial transactions. 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 corporate data, by both private individuals and foreign governments. In addition, because the techniques used to cause such security breaches change frequently, often are not recognized until launched against a target and may originate from less regulated and remote areas around the world, we may be unable to proactively address these techniques or implement adequate preventative measures. 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 , natural , power and other security .
Additionally, as we grow through acquisitions and pursue new initiatives that improve our operations and cost structure, we are also expanding and improving our information technologies, resulting in a larger technological presence, utilization of “cloud” computing services, and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such 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. To the extent that our activities or the activities of our customers involve the storage and transmission of confidential information, security breaches (including breaches of security of customer systems and networks) and viruses could expose us to , and other possible liabilities. Any to prevent security or computer viruses could also cause existing customers to confidence in our systems and could affect our reputation, results of operations and ability to attract and maintain customers and businesses. In addition, a security could also subject us to additional regulatory , us to civil and possible financial liability and cause reputational .
Cyberattacks are increasing in number and sophistication and we may be unable to anticipate or prevent such attacks.
Certain new technologies, such as the use of artificial intelligence, present new and significant cybersecurity safety risks that must be analyzed and addressed before implementation. The emergence and maturation of artificial intelligence capabilities has led to new and/or more sophisticated methods of attack, including fraud that relies upon “deep fake” impersonation technology, or other forms of generative automation that have scaled up the effectiveness of cyber threat activity. Among other things, damage can occur due to theft or extortion of funds, fraud or identity theft perpetrated on clients, or adverse publicity associated with a breach and its potential effects. Perpetrators potentially can be associates, clients, and certain vendors, all of whom legitimately have access to some portion of our systems, as well as outsiders with no legitimate access. These risks are heightened through the increasing use of digital and mobile solutions which allow for rapid money movement and increase the difficulty to detect and prevent fraudulent transactions.
We may be adversely affected by disruptions in information technology and telecommunications systems on which we rely, including those of third-party service providers where we may have limited or no control over operational functionality.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third-party accounting systems and mobile and online banking platforms. We outsource many of our major systems, such as data processing, loan servicing, deposit processing and online banking platforms. While we have selected these vendors carefully, we do not control their actions. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Financial or operational difficulties of a vendor could also damage our operations if those difficulties interfere with the vendor’s ability to serve us. Furthermore, our vendors could also be sources of operational and information security risk to us, including from breakdowns or failures of their own systems or capacity constraints. Replacing these third-party vendors could also create significant and expense. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service if demand for such services exceeds capacity or such third-party systems or experience . If sustained or repeated, a system or service could result in a of our ability to process new and renewed loans, gather deposits and provide customer service. It could also compromise our ability to operate effectively, our reputation, result in a of customer business and/or subject us to additional regulatory and possible financial liability, any of which could have a
material adverse effect on our financial condition and results of operations. Our ability to recoup our losses may be limited legally or practically in many situations.
Our risk management framework may not be effective in mitigating risks and/or losses.
We have implemented a risk management framework to mitigate our risk and loss exposure. This framework is comprised of various processes, systems and strategies, and is designed to identify, measure, assess, monitor, report and manage the types of risk to which we are subject, including, among others, credit, capital, interest rate, liquidity, legal and regulatory, cybersecurity, compliance, strategic, reputational and operational risks related to our employees, systems and vendors, among others . Any system of control and any system to reduce risk exposure, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met and will be effective under all circumstances or that it will adequately identify, manage or mitigate any risk or loss to us. Additionally, instruments, systems, controls and strategies used to hedge or otherwise understand and manage exposure to the risks we are subject to could be less effective than anticipated. As a result, we may not be able to effectively mitigate our risk exposures in particular market environments or against particular types of risk. If our risk management framework is not , we could and become subject to , regulatory consequences, or reputational among other consequences, any of which could result in our business, financial condition, results of operations or prospects being materially affected.
We may not be able to attract and retain management-level and specialized talent.
We have assembled a management team which has substantial background and experience in banking and financial services in our markets. Our success depends on our ability to retain a strong management team and key personnel in specialized knowledge areas because of their skills, knowledge of our markets, years of industry experience, and/or the difficulty of promptly finding qualified replacement personnel. The unexpected loss of one or more of these key personnel (including key personnel within any businesses we have acquired) could have a material adverse impact on our business.
Our inability to retain and attract experienced bankers could negatively affect our growth.
Revenue growth in some of our lines of business depends upon top talent. In recent years, our cost of hiring and retaining top revenue-producing talent has increased, and that trend is likely to continue. Moreover, much of our organic loan growth in recent years was the result of our ability to attract experienced financial services professionals who have been able to attract customers from other financial institutions. 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. Loss of key employees with extensive customer relationships may lead to the loss of business if customers were to follow that employee to another financial institution or otherwise choose to transition to another financial institution.
Our accounting estimates and risk management processes rely on 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. These models reflect assumptions and rely on their design and other processes that may not be accurate or properly performed, particularly in times of market stress or other unforeseen circumstances.
If the assumptions used in our model for measuring interest sensitivity and asset-liability management fail to appropriately anticipate customer response to changing interest rates, our earnings and / or liquidity position could be threatened. 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. Similarly, models used to estimate credit losses rely on various assumptions that may not ultimately result in accurate loss predictions.
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 those caused by failures in controls, data management, human error or from the reliance on technology. If the models we use for interest rate risk and asset-liability management are inadequate, we may incur increased or unexpected losses upon changes in market interest rates or other market measures. If the models we use for estimating our expected credit losses are inadequate, the allowance for credit losses may not be sufficient to support future charge-offs. If the models we use to measure the fair value of financial instruments are inadequate, the fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what we could realize upon sale or settlement of such financial instruments. Any such in our analytical or forecasting models could have a material 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.
In recent years, the United States generally and the regions in which we operate specifically have experienced significant inflationary pressures, evidenced by higher gas prices, higher food prices and higher prices on other consumer items. During 2025, the effects of inflation continued 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. Accordingly, inflation can result in material adverse effects upon our customers, their businesses (as a result of rising costs, including labor) and, as a result, our financial position and results of operations. Inflation also can and does generally lead to higher interest rates, which have their own separate risks. 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.
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. If the trend persists, the deficit could create inflationary pressure, which may be detrimental to the U.S. economy, and unemployment rates could suffer if deficit reduction measures are implemented. Additionally, the current federal administration has deployed and may continue to deploy new trading strategies, which have created and may continue to create economic volatility. Our financial performance is highly dependent upon the economic landscape in the markets where we operate and in the United States as a whole and how it impacts borrowers’ ability to pay interest on and repay principal of outstanding loans, the value of underlying collateral securing loans, as well as demand for loans and other products and services we offer. Unlike banks that are more geographically diversified, we are a regional bank that provides services to customers primarily in Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama. The market conditions in these markets may be different from, and could be than, the economic conditions in the United States as a whole. 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 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.
Federal Reserve strategies can, and often are intended to, affect the domestic money supply, inflation, interest rates, and the shape of the yield curve.
Effects on the yield curve often are most pronounced at the short end of the curve, which is of particular importance to us and other banks. Among other things, easing strategies are intended to lower interest rates, expand the money supply, and stimulate economic activity, while tightening strategies are intended to increase interest rates, tighten the money supply, and restrain economic activity. Many external factors may interfere with the effects of these plans or cause them to be changed, sometimes quickly. Such factors include significant economic trends or events as well as significant international monetary policies and events. Such strategies also can affect the United States and world-wide financial systems in ways that may be difficult to predict. 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.
A considerable amount of our profitability is dependent on net interest income, which is the difference between interest income earned on loans, leases and investment securities and interest expense paid on deposits, other borrowings, senior debt and subordinated notes. The absolute level of interest rates as well as changes in interest rates, including changes to the shape of the yield curve, may affect our level of interest income, the primary component of our gross revenue, as well as the level of our interest expense. In a period of changing interest rates, interest expense may increase at different rates than the interest earned on assets, impacting our net interest income. Interest rate fluctuations are caused by many factors which, for the most part, are not under our control. For example, national monetary policy implemented by the Federal Reserve plays a significant role in the determination of interest rates. Additionally, competitor pricing and the resulting negotiations that occur with our customers also impact the rates we collect on loans and the rates we pay on deposits.
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. 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. 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. In either event, if market interest rates should move contrary to our position, this “gap” may work against us, and our results of operations and financial condition may be affected.
We have entered into certain hedging transactions, including interest rate swaps, which are designed to lessen elements of our interest rate exposure. 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.
High volatility in the yield curve, including sharp movements on and changes in the slope of the curve, can complicate or reduce the efficacy of our balance sheet management practices. Significant changes in the yield curve may also 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. The yield curve is steep when short-term rates are much lower than long-term rates; it is flat when short-term rates and long-term rates are nearly the same; and it is inverted when short-term rates exceed long-term rates. Historically, the yield curve is usually upward sloping (higher rates for longer terms). However, the yield curve can be relatively flat or inverted (downward sloping), which has happened several times in the past few years. A flat or inverted yield curve, which tends to decrease net interest margin, would adversely impact our lending businesses and investment portfolio. See Risks Associated From Changes in Economic Conditions and Monetary Policy within this section of the Report for additional information.
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. 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. Negative public opinion could result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance, regulatory compliance, securities compliance, mergers and acquisitions, from sharing or inadequate protection of customer information and from actions taken by government regulators and community organizations in response to that conduct. Negative public opinion could also result from adverse news or publicity that impairs the reputation of the financial services industry generally, such as bank , or that relates to parties with whom we have important relationships. Because we conduct most of our business under the “United Community” brand, public opinion about one business could affect our other businesses.
CREDIT AND COUNTERPARTY RISKS
We face the risk that our clients may not repay their loans or other obligations and that the realizable value of collateral may be insufficient to avoid a charge-off.
We also face risks that counterparties, in a wide range of situations, may fail to honor their obligations to pay us. In our business some level of credit charge-offs is unavoidable and overall levels of credit charge-offs can vary substantially over time. Lending activities are inherently risky. When we lend money or commit to lend, we incur credit risk or the risk of loss if borrowers do not repay their loans or other credit obligations. Credit risk includes, among other things, the quality of our underwriting, the impact of increases in interest rates and changes in the economic conditions in the markets where we operate as well as across the United States.
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.
We are exposed to higher credit and concentration risk from our CRE, commercial and industrial and commercial construction lending.
Our credit risk and credit losses can increase if our loans become concentrated to borrowers engaged in the same or similar activities or to borrowers who, as a group, may be uniquely or disproportionately affected by economic or market conditions. As of December 31, 2025, approximately 75% 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. During periods of lower economic growth or challenging economic periods, small to medium-sized businesses may be impacted more severely and more quickly than larger businesses. Consequently, the ability of such businesses to repay their loans may deteriorate, and in some cases this deterioration may occur quickly, which would adversely affect our results of operations and financial condition. An increase in non-performing loans could result in a net loss of earnings from these loans, an increase in the provision for loan and an increase in loan charge-offs, all of which could have a material effect on our business, financial condition and results of operations.
Deterioration in economic conditions, housing conditions and commodity and real estate values and an increase in unemployment in certain states or locations could result in materially higher credit losses if loans are concentrated in those locations. Our loans are heavily concentrated in our primary markets of Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama. These markets may have different or weaker performance than other areas of the country and our portfolio may be more negatively impacted than a financial services company with wider geographic diversity.
See the section captioned “Credit Risk Management” section of Part II, Item 7. 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.
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. CECL has created more volatility in the level of our ACL because it relies on macroeconomic forecasts. It is possible that CECL may increase the cost of lending in the industry and result in slower loan growth and lower levels of net income. The level of the allowance reflects our continuing evaluation of factors including current economic forecasts, historical loss experience, the volume and types of loans, and specific credit risks. The determination of the appropriate level of the ACL inherently involves subjectivity in our modeling and requires us to make estimates of current credit risks and future trends, all of which may undergo material changes or vary from our historical experience. Deterioration in economic conditions affecting borrowers, changing economic forecasts, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the ACL. If we are required to materially increase our level of ACL for any reason, such increase could affect our business, financial condition and results of operations .
In addition, bank regulatory agencies periodically review our ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments different than those of management. Furthermore, if charge-offs in future periods exceed the ACL, we will need additional provisions to increase the ACL. Any increases in the ACL will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations.
See the section captioned “Allowance for Credit Losses” in Part II, Item 7. MD&A of this Report for further discussion related to our process for determining the appropriate level of the ACL.
REGULATORY, LEGISLATIVE AND LEGAL RISKS
We are subject to a challenging regulatory environment that restricts our activities.
We operate in heavily regulated industries. Our regulatory burdens, including both operating restrictions and ongoing compliance costs, are substantial. We are subject to many banking, deposit, insurance, and consumer lending regulations in addition to the rules applicable to all companies whose securities are publicly traded in the U.S. securities markets. Failure to comply with applicable regulations could result in financial, structural, and operational penalties. In addition, efforts to comply with applicable regulations may increase our costs and/or limit our ability to pursue certain business opportunities. See Supervision and Regulation in Item 1 of this Report for additional information concerning financial industry regulations. Federal and state regulations significantly limit the types of activities in which we, as a financial institution, may engage. 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. Actions could be taken that would further limit the amount of interest or fees we can charge, further restrict our ability to collect loans or realize on collateral, affect the terms or profitability of the products and services we offer, or materially and affect us in other ways. Additionally, each Presidential
administration seeks to implement a regulatory reform agenda that potentially is significantly different than that of the prior administration, which will affect the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. While we do not specifically know what these changes will be, or what future administrations may seek to reverse, we may be required to implement different compliance procedures and modify our policies and activities to comply with changes set forth by the administration. This may cause us to incur additional costs and expenses, and dedicate additional resources, to achieve compliance with any changes from the administration, which can impact our financial condition and the results of our operations
Failure to maintain certain regulatory capital levels and ratios could result in regulatory actions that would be materially adverse to our shareholders.
Pressures to maintain appropriate capital levels and address business needs in a changing economy could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could be dilutive or otherwise have an adverse effect on our shareholders. Such actions could include: reduction or elimination of dividends; the issuance of common or preferred stock, or securities convertible into stock; or the issuance of any class of stock having rights that are adverse to those of the holders of our existing classes of common or preferred stock. In addition, these requirements could have a negative impact on our ability to lend, grow deposit balances, make acquisitions or make share repurchases or redemptions. Higher capital levels could also lower our return on equity. Additional information regarding the U.S. capital standards and our management of them appears: under the caption Capital Adequacy in Item 1 of this report; under the caption “Capital Risk Management” of Part II, Item 7. MD&A; and Note 21 Regulatory Matters, of Part II, Item 8. Financial Statements.
Political dysfunction and volatility within the federal government, both at the regulatory and Congressional level, creates significant potential for major and abrupt shifts in federal policy regarding bank regulation, taxes, and the economy, any of which could have significant and adverse impacts on our business and financial performance.
Certain of our operations and customers are dependent on the regular operation of the federal or state government or programs they administer. For example, our SBA lending program depends on interaction with the SBA, an independent agency of the federal government. During a lapse in funding, such as the one that occurred during the 2025 federal government “shutdown”, the SBA may not be able to engage in such interaction. Similarly, loans we make through USDA lending programs may be delayed or adversely affected by lapses in funding for the USDA. In addition, customers who depend directly or indirectly on providing goods and services to federal or state governments or their agencies may reduce their business with us or delay repayment of loans due to lost or delayed revenue from those relationships. If funding for these lending programs or federal spending generally is reduced as part of the appropriations process or by administrative decision, demand for our services may be reduced. Any of these developments could have a material effect on our financial condition, results of operations or liquidity.
In addition, the current Presidential administration and Congress are expected to significantly change the priorities, scope, practices and/or staffing levels of various regulatory agencies, including the CFPB. As a result, state attorneys general and other state regulators may increase their enforcement activities to fill any actual or perceived “regulatory gap” at the federal level and seek to obtain remedies such as regulatory sanctions, customer rescission rights and civil money penalties. Such uncertainties may make it more difficult for us to comply with consumer protection laws, which may result in increased compliance costs and potential non-compliance and associated regulatory actions. Any regulatory actions against us could have a material adverse effect on our business, financial condition or results of operations.
Legal disputes are an unavoidable part of business, and the outcome of pending or threatened litigation cannot be predicted with any certainty.
We face the risk of litigation from clients, associates, vendors, contractual parties, and other persons, either singly or in class actions, and from federal or state regulators. We manage those risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics processes, and other means. However, the commencement, outcome, and magnitude of litigation cannot be predicted or controlled with any certainty. Substantial legal liability or significant regulatory action against us could have material adverse financial effects or cause significant reputational harm to us, which in turn could seriously harm our business prospects.
Data privacy is becoming a major business and political concern. The laws governing it are new, and are likely to evolve and expand.
Many non-regulated, non-banking companies have gathered large amounts of personal details about millions of people, and have the ability to analyze that data and act on that analysis very quickly. This situation has prompted governmental responses. Two prominent responses are the European Union General Data Protection Regulation and the California Consumer Privacy Act. 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.
LIQUIDITY AND FUNDING RISKS
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.
Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors, borrowers and other creditors by either converting assets into cash or accessing new or existing sources of incremental funds. Liquidity risk arises from the possibility that we may be unable to satisfy current or future funding requirements and needs.
Deposit levels may be affected by several factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments, general economic and market conditions, customer concerns about the safety and soundness of our bank, whether real or perceived, or the U.S. banking system in general. 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 and natural disasters. Furthermore, loans generally are not readily convertible to cash.
We anticipate we will continue to rely primarily on deposits, loan repayments, and cash flows from our investment securities to provide liquidity. However, from time to time, secondary sources may be used to augment our primary funding sources. Such secondary sources may include FHLB advances, brokered deposits, repurchase agreements, secured and unsecured federal funds lines of credit from correspondent banks, Federal Reserve borrowings and/or accessing the equity or debt capital markets. The availability of these secondary funding sources is subject to broad economic conditions, to regulation and to investor assessment of our financial strength and, as such, the cost of funds may fluctuate significantly and/or the availability of such funds may be restricted, thus impacting our net interest income, our immediate liquidity and/or our access to additional liquidity. Additionally, if we fail to remain “well-capitalized” our ability to utilize funding sources such as 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. Our access to funding sources in amounts adequate to finance our activities, or on terms attractive to us, could be impaired by factors that affect us specifically or the financial services industry in general. For example, factors that could detrimentally impact our access to liquidity sources include our financial results, a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us, a reduction in our credit rating, any damage to our reputation, counterparty availability, changes in the activities of our business partners, changes affecting our loan portfolio or other assets, or any other event that could cause a decrease in depositor or investor confidence in our creditworthiness and business. Our access to liquidity could also be by factors that are not specific to us, such as general business conditions, interest rate fluctuations, or of the financial markets or views and expectations about the prospects for the financial services industry as a whole, or legal, regulatory, accounting, and tax environments governing our funding transactions. 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 due to economic and other factors beyond our control. Any such event or to manage our liquidity effectively could affect our competitive position, increase our borrowing costs and the interest rates we pay on deposits, limit our access to the capital markets, or cause us to sell investment securities and incur from those sales, any or all of which could have a material effect on our results of operations or financial condition.
A downgrade of our credit rating could limit our access to borrowings and increase our borrowing costs.
Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including our financial strength, performance, prospects and operations as well as factors not under our control. Rating agencies could make adjustments to our credit ratings at any time, and there can be no assurance that they will maintain our ratings at current levels or that downgrades will not occur. If rating agencies were to downgrade our credit rating, our borrowing costs would increase or the availability of borrowing sources could be limited. Additionally, a downgrade could occur at a time that is disadvantageous when our need for borrowings is high, further increasing our overall cost of funds. 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.
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. According to statements made by the FDIC staff and the leadership of the federal banking agencies, customers with larger uninsured deposit account balances often are
small- and mid-sized businesses that rely upon deposit funds for payment of operational expenses and, as a result, are more likely to closely monitor the financial condition and performance of their depository institutions. As a result, in the event of financial distress, uninsured depositors historically have been more likely to withdraw their deposits.
If a significant portion of our deposits were to be withdrawn within a short period of time such that additional sources of funding would be required to meet withdrawal demands, we may be unable to obtain funding at favorable terms, which may have an adverse effect on our net interest margin. Moreover, obtaining adequate funding to meet our deposit obligations may be more challenging during periods of elevated prevailing interest rates. Our ability to attract depositors during a time of actual or perceived distress or instability in the marketplace may be limited. Further, interest rates paid for borrowings generally exceed the interest rates paid on deposits. This spread may be exacerbated by higher prevailing interest rates, credit ratings, industry pressures or macroeconomic factors. In addition, because our investment securities lose value when interest rates rise, after-tax proceeds resulting from the sale of such assets may be diminished during periods when interest rates are elevated. 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 GAAP requires management to make significant assumptions, estimates and judgments that affect the financial statements.
Management must make significant assumptions and estimates and exercise significant judgment in selecting and applying accounting and reporting policies. In some cases, management must select a policy from two or more alternatives, any of which may be reasonable under the circumstances, which may result in reporting materially different results than would have been reported under a different alternative. The estimate that is consistently one of our most critical is the level of the ACL. 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. Due to the inherent nature of these estimates, it is possible that, at some time in the future, we may significantly increase the ACL and/or sustain credit losses that are significantly higher than the provided allowance, or we may recognize a significant provision for impairment of assets, or we may make some other adjustment that will differ materially from the estimates that we make today. 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 in a lengthy process.
In addition, changes in accounting standards or interpretations could negatively affect our reported earnings and financial condition.
The accounting standard setters, including the FASB, the SEC and other regulatory agencies, periodically change the financial accounting and reporting standards that govern the preparation of our consolidated financial statements. For additional information, refer to Note 2 to our consolidated financial statements contained in this Report. These changes can be difficult to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, which would result in the recasting of our prior period financial statements.
We could be subject to changes in tax laws, regulations and interpretations or challenges to our income tax provision.
We compute our income tax provision based on enacted tax rates in the jurisdictions in which we operate. Any change in enacted tax laws, rules or regulatory or judicial interpretations, any adverse outcome in connection with tax audits in any jurisdiction or any change in the pronouncements relating to accounting for income taxes could adversely affect our effective tax rate, tax payments and results of operations.
Our internal controls and procedures may fail or be circumvented.
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. Failure to implement effective controls and procedures or circumvention of our controls and procedures could harm our business, results of operations and financial condition or cause us to fail to meet our public reporting obligations.
GEOGRAPHIC AND CLIMATE RISKS
We are subject to risks of operating in various jurisdictions.
Our success is also influenced heavily by population growth, income levels, loans and deposits and on stability in real estate values in our markets. To a significant degree our banking business is exposed to economic, regulatory, natural disaster, and other risks that primarily impact the southeastern region of the United States where we do most of our traditional banking business. If that region 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. If market and economic conditions deteriorate, this may lead to valuation adjustments on our loan portfolio and losses on defaulted loans and on the sale of other real estate owned. Additionally, such adverse economic conditions in our market areas, specifically decreases in real estate property values due to the nature of our loan portfolio, the majority of which is secured by real estate, could reduce our growth rate, affect the ability of our customers to repay their loans and generally affect our financial condition and results of operations. We are less than larger institutions to spread the risks of 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.
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. Although our banking offices are geographically dispersed throughout portions of the southeastern United States and we maintain insurance coverage for such events, a significant natural disaster in or near one or more of our markets could have a material adverse effect on our financial condition, results of operations or liquidity.
Climate change presents both immediate and long-term risks to us and our customers and clients, with the risks expected to increase over time. Climate risks can arise from both physical risks and transition risks. The physical risk from climate change could result from increased frequency and/or severity of adverse weather events. Transition risks may arise from changes in regulations or market preferences, which in turn could have negative impacts on asset values, results of operations or our reputation or that of our customers and clients.
These events could also increase the volatility in financial markets and increase our counterparty exposures and other financial risks, which may result in lower revenues and higher cost of credit. For example, the cost of property and flood insurance in Florida has increased significantly in recent years, which has increased the cost of doing business. This can hinder profitability of existing customers and creates a higher barrier to entry for new businesses, which could decrease demand for borrowing for potential and existing customers.
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.
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. 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 stock is dividends that we receive from the Bank. As a South Carolina state-chartered bank, the Bank is subject to limitations on the amount of dividends that it is permitted to pay, as described under “Supervision and Regulation - Payment of Dividends” in Part I, Item 1 of this Report. The federal banking agencies have also issued policy statements which provide that bank holding companies and insured banks should generally only pay dividends out of current earnings. The Federal Reserve may also prevent the payment of a dividend by the Bank if it determines that the payment would be an unsafe and unsound banking practice. The Holding Company and the Bank must also maintain the CET1 capital conservation buffer of 2.5% to avoid becoming subject to restrictions on capital distributions, including dividends. 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.
Holders of our indebtedness have rights that are senior to those of our common shareholders.
At December 31, 2025, we had outstanding subordinated debentures, trust preferred securities and accompanying subordinated debentures totaling $120 million. Payments of the principal and interest on the subordinated debentures, including those accompanying the trust preferred securities are senior to payments with respect to shares of our common stock. We also conditionally guarantee payments of the principal and interest on the trust preferred securities. As a result, we must make payments on these debt instruments (including the related trust preferred securities) before any dividends can be paid on our common stock and, in the event of bankruptcy, dissolution or liquidation, the holders of the debt must be satisfied before any distributions can be made on our common stock. We have the right to defer distributions on the subordinated debentures related to the trust preferred securities (and the related guarantee of payments on the trust preferred securities) for up to five years, during which time no dividends may be paid on our common stock. If our financial condition deteriorates or if we do not receive required regulatory approvals, we may be required to defer distributions on the subordinated debentures related to the trust preferred securities (and the related guarantee of payments on the trust preferred securities).
We may also from time to time issue additional senior or subordinated indebtedness or preferred stock that would have to be repaid before our common shareholders would be entitled to receive any of our assets.
Our stock price can be volatile.
Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive. Our stock price can fluctuate significantly in response to a variety of factors, some of which are unrelated to our financial performance, including, among other things:
• actual or anticipated variations in quarterly results of operations;
• recommendations by securities analysts;
• operating and stock price performance of other companies that investors deem comparable to us;
• news reports relating to trends, concerns and other issues in the financial services industry;
• perceptions in the marketplace regarding us and/or our competitors;
• new technology used, or services offered, by competitors;
• significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors;
• failure to integrate acquisitions or realize anticipated benefits from acquisitions;
• changes in government regulations; or
• geopolitical conditions such as acts or threats of war, terrorism, military conflicts, the effects (or perceived effects) of pandemics and trade relations.
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.
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 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:
• 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.
Additionally, our articles authorize the Board to issue shares of preferred stock without shareholder approval and upon such terms as the Board may determine. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions, financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a controlling interest in us. In addition, certain provisions of Georgia law, including a provision which restricts certain business combinations between a Georgia corporation and certain affiliated shareholders, may delay, discourage or prevent an attempted acquisition or change in control of United.
Our stockholders may suffer dilution if we raise capital through public or private equity financings to fund our operations, to increase our capital, or to expand.
If we raise funds by issuing equity securities or instruments that are convertible into equity securities, the percentage ownership of our current common stockholders will be reduced, the new equity securities may have rights and preferences superior to those of our outstanding common stock, and additional issuances could be at a sales price that is dilutive to current stockholders. We may issue or be required to issue additional shares of common stock, or securities convertible into, exchangeable for or representing rights to acquire shares of common stock in order to maintain capital at desired or regulatory-required levels. We could also issue additional equity securities directly as consideration in acquisitions of other financial institutions or other investments that we may make that would be dilutive to stockholders in terms of voting power and share-of-ownership, and could be dilutive financially or economically.
OTHER EXTERNAL RISKS
Pandemics and disease outbreaks, 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.
Widespread outbreaks of diseases and acts of terrorism may cause significant disruption in the international and United States.S. economies and financial markets and could have an adverse effect on our business and results of operations. 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. Governments of the states in which we have operations may take preventative or protective actions, such as imposing restrictions on travel and business operations, advising or requiring individuals to limit or forego their time outside of their homes, and ordering temporary closures of businesses that have been deemed to be non-essential. 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 and furloughs of employees nationwide, including the regions in which we operate.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Policy statements and regulations by state and federal bank regulators indicate that financial institutions should design multiple layers of security controls to establish lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing internet-based services of the financial institution. For 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.
Federal financial regulatory agencies require banking organizations and their service providers to notify their primary federal regulator as soon as possible and no later than 36 hours after the discovery of a “computer-security incident” that rises to the level of a “notification incident” as those terms are defined in the rule. Banks’ service providers are required under that rule to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has
experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for as much as four hours.
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. Additionally, multiple states and Congress are considering laws or regulations which could create new individual privacy rights and impose increased obligations on companies handling personal data.
Risk management and strategy
The regulatory requirements referenced above recognize that, in the ordinary course of business, we rely on electronic communications and information systems to conduct our operations and store sensitive data. “Information systems” means electronic information resources that we own or use, including physical or virtual infrastructure controlled by these information resources, or components thereof, organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of the information necessary to maintain or support our operations. We face significant and persistent cybersecurity risks due to: the breadth of geographies, networks, and systems we must defend against cybersecurity attacks; the complexity, technical sophistication, value, and widespread use of our systems, products and processes; the attractiveness of our systems, products and processes to threat actors (including state-sponsored organizations) seeking to inflict harm on us or our customers; the substantial level of harm that could occur to us and our customers were we to suffer impacts of a material cybersecurity incident; and our use of third-party products, services and components . Because cybersecurity continue to evolve, we have been required and may continue to be required to expend significant resources to continue to implement, modify or our protective measures or to and remediate any information security . Financial expenditures may also be required to meet regulatory changes in the information security and cybersecurity domains. Risks and exposures related to cybersecurity attacks are expected to remain significant for the foreseeable future due to the rapidly evolving nature and sophistication of these , as well as the expanding use of internet banking, mobile banking and other technology-based products and services by us and our customers. See “Item 1A. – Risk Factors” in this Report for a further discussion of risks related to cybersecurity.
We believe our cyber risk management program is grounded in globally recognized best practices and standards, incorporating frameworks such as the Center for Internet Security’s Critical Security Controls, which provide prioritized, actionable safeguards to defend against common cyber threats, and the Cyber Risk Institute Profile, a standardized assessment framework for the financial sector built on the NIST Cybersecurity Framework. Our leveraging of these proven models is intended to ensure a comprehensive, risk-based approach that strengthens resilience, streamlines compliance, and supports continuous improvement across our organization. We periodically engage third parties to assess our cyber risk program and technical controls. To address cybersecurity threats (defined as potential unauthorized occurrences on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of those systems or any information residing in those systems therein), we have implemented an and event response program. That program, which is designed to identify, assess, manage, mitigate, and respond to cybersecurity , is integrated within our overall enterprise risk management and business continuity frameworks. We employ an in-depth, layered, approach that leverages people, processes and technology to manage and maintain cybersecurity controls. We also employ a variety of preventative and detective tools to monitor, block, and provide alerts regarding activity relative to our information systems, as well as to report on any advanced . An ongoing enterprise-wide security awareness training program is in place to help protect our data, systems, and networks from attacks and cyber . The program is designed to allow for the detection and timely and recovery from cybersecurity (defined as occurrences, or a series of related occurrences, on or conducted through our information systems that the confidentiality, , or availability of those systems or any information residing therein) and events by providing a well-defined, organized approach for handling any potential to the confidentiality, , and/or availability of our information systems.
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. To help mitigate adverse impacts from a cybersecurity incident, we assess third-party vendors as a part of our vendor onboarding and continued due diligence, which includes processes to assess information security posture. Depending upon the level of perceived security risk, we may impose security requirements upon a supplier, including: maintaining an effective security management program; abiding by information handling and asset management requirements; and notifying us in the event of any known or suspected cyber incident. We periodically conduct (or engage a third party to conduct) reviews of third-party hosted applications with a specific focus on any sensitive data shared with third parties. The internal business owners of hosted applications, depending upon the level of risk, are required to provide a report as to
their controls ( e.g., a System and Organization Controls (SOC) 2 or ISO 27001 (Information and Security Certification) or similar report).
Our information security team in combination with other third-party vendors monitor our information systems for suspicious activity, such as unauthorized intrusions. Suspected or confirmed threats, incidents, or events, however, also may be reported by bank employees, customers, intrusion detection systems, third-party servicers, or government entities. Once reported, cybersecurity incidents are to be brought to the attention of our Information Technology and Security Team. Depending upon the nature and perceived threat level of the reported event, our overall enterprise risk management process would require the involvement of other management and response teams representing other groups ( e.g., Information Technology, Information Security, Legal/Compliance, Corporate Security, Internal Audit, Human Resources, Finance/Accounting, Corporate Communications, Designated Cyber Coach) within our organization.
Incident and risk event levels each vary from no (or low) risk to crisis (high) risk. The determination of the incident and risk level will dictate the level of personnel that will be responsible for addressing the incident, controlling the effects of the incident and formulating the response to the incident. 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.
Each of the management and response teams, within its assigned level, is responsible for providing an orderly response to security incidents and risk events; preventing a serious loss of profits, public confidence, or information assets by providing an immediate, effective, and skillful response to any unexpected event which negatively impacts the confidentiality, integrity, and/or availability of our systems, network, or the non-public personal information of its customers, interruptions to customers’ experiences, or other anomalous situations; taking the steps it deems necessary to contain, mitigate, or resolve a security incident or risk event; and investigating suspected security incidents and risk events in a timely and cost manner, reporting findings to management, determining an appropriate course of action, and coordinating communications to customers, regulatory authorities, and law enforcement agencies as necessary.
Following a cybersecurity incident, and during its investigation and the formulation of a response, our processes also envision measures designed to contain and/or eradicate the incident and prevent further effects. Once it is determined that the incident has been resolved, we then work to establish appropriate controls (if applicable) to address similar future events and/or prevent another similar event from occurring in the future. We have experienced, and will continue to experience, cyber incidents in the normal course of business. To date, however, we have not experienced any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
To strengthen our organizational resilience and mitigate the likelihood and impact of future cybersecurity incidents, we routinely conduct structured tabletop exercises tailored for both technical teams and management audiences. These exercises help validate our response processes, improve cross-functional coordination, and ensure readiness across all levels of the organization. In addition, we maintain an active retainer with a qualified digital forensics firm, enabling rapid investigative support when needed, and we leverage access to specialized cyber coaches provided through our cyber insurance carrier to further enhance our preparedness and response capabilities.
Governance
Our cybersecurity program is headed by our Chief Information Security Officer (CISO) , who reports to our Chief Information Officer. Our CISO is informed about and monitors prevention, detection, mitigation and remediation efforts through regular communication and reporting from professionals in the information security team, several of whom have extensive records of service in financial institutions and cybersecurity. Our CISO has over 20 years of experience in IT operations/security roles in the financial services industry and holds a cybersecurity certification as a Certified Information Systems Security Professional (“CISSP”). Other members of our Information Security, Information Technology and Enterprise Risk teams possess respected security certifications such as CISSP, CompTIA Security+, SANS Institute Cloud Security Essentials, 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, among others.
As part of its oversight responsibilities over the Company risks and controls, the Board ultimately is responsible for overseeing our cyber and information security risks. The Board has delegated this responsibility to its Risk Committee. At each quarterly meeting of the Risk Committee, our CISO reports to the Risk Committee regarding security testing, training, audits, key cybersecurity metrics, and our efforts to identify, prepare for, prevent, and respond to critical threats. 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.
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, 2025, we operated 199 banking offices 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. 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. For many years, branch usage by clients has slowly declined, and as a result, 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. Notes 7 and 13 to our consolidated financial statements include additional information regarding investments in premises and equipment and leased properties.
ITEM 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 UNITED’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Stock. Our common shares trade on the NYSE under the symbol “UCB”. At January 31, 2026, there were 9,075 record shareholders of United’s common stock.
Dividends. Our Board declared cash dividends totaling $0.98 and $0.94 per share on our common stock in 2025 and 2024, 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. The payment of dividends is a decision of our Board based upon then-existing circumstances, including our rate of growth, profitability, financial condition, existing and anticipated capital requirements, the amount of funds legally available for the payment of cash dividends, regulatory constraints and such other factors as the Board determines relevant.
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 and under the heading of “Supervision and Regulation” in Part I, Item 1. Business.
Share Repurchases . The following table contains information regarding purchases of our common stock made during the quarter ended December 31, 2025 by or on behalf of United or any “affiliated purchaser,” as defined by Rule 10b-18(a)(3) of the Exchange Act:
(Dollars in thousands, except for per share amounts)
Total Number of Shares
Purchased
Average
Price Paid
per Share (1)(2)
Total Number of
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 (2)(3)
October 1, 2025 - October 31, 2025
November 1, 2025 - November 30, 2025
December 1, 2025 - December 31, 2025
Total
(1) Excludes commissions.
(2) Excludes excise tax on share repurchases.
(3) Under United’s 2025 common stock repurchase program, which expired on December 31, 2025, management was authorized to repurchase up to $100 million of its common stock. Under the program, shares may be repurchased in open market transactions or in privately negotiated transactions, from time to time, subject to market conditions, including transactions outside the safe harbor provided by Exchange Act Rule 10b-18 (but nevertheless adhering to Rule 10b-18’s requirements). The repurchase program may be modified, suspended or discontinued at any time at the Company’s discretion without prior notice, and does not commit the Company to repurchase shares of its common stock. The actual number and value of the shares to be purchased will be determined by the Company at its discretion, and will depend on a number of factors including the market price of United’s common stock, general market and economic conditions, the availability of alternative investment opportunities and other factors the Company deems appropriate. In the fourth quarter of 2025, the Board approved the renewal of United’s common stock repurchase program for 2026, authorizing the repurchase of up to $100 million from January 1, 2026 through December 31, 2026.
Performance Graph. Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our common stock to the cumulative total returns on the NYSE Index and the KBW Nasdaq Regional Banking Index for the five-year period commencing December 31, 2020 and ending on December 31, 2025. 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.
Cumulative Total Return*
United Community Banks, Inc.
NYSE Index
KBW Nasdaq Regional Banking Index
* Assumes $100 invested on December 31, 2020 in our common stock and above noted indexes. 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
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 2024 and 2025.
For additional information related to financial trends between 2024 and 2023, 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, 2024, filed with the SEC on February 27, 2025, which information under that caption is incorporated herein by this reference. Historical results of operations are not necessarily predictive of future results.
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 core 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,” “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. Management uses these non-GAAP measures because it believes they may 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. Management believes 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. 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 and are not necessarily comparable to other 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 21 of MD&A.
Executive Overview and Results of Operations
Overview
We offer a wide array of commercial and consumer banking services and investment advisory services, which as of December 31, 2025, 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. At December 31, 2025, we had consolidated total assets of $28.0 billion and 3,070 full-time equivalent employees.
Recent Developments
• On May 1, 2025, we completed the acquisition of ANB, which was headquartered in Oakland Park, Florida where it operated one banking location. In the acquisition, we acquired $301 million in loans and $374 million in deposits. ANB’s results are included in our consolidated results beginning on May 1, 2025. We continue to evaluate future potential transactions as opportunities arise.
• During 2025, we completed the following transactions in accordance with our ongoing capital management strategy:
◦ On September 15, 2025, we redeemed all outstanding shares of our Series I preferred stock, which had a carrying value of $88.3 million.
◦ We repurchased $44.3 million of our common stock.
◦ We redeemed two series of senior debt instruments prior to maturity totaling $135 million.
Results of Operations
We reported net income and diluted earnings per common share of $328 million and $2.62, respectively, in 2025 compared to $252 million and $2.04, respectively, in 2024. Net income - operating and diluted earnings per common share - operating for 2025 were $336 million and $2.71, respectively, compared to $284 million and $2.30, respectively, for 2024. Net income - operating for 2025 excludes merger-related and other charges, while 2024 also excludes additional items, notably the loss on the sale of the manufactured housing loans of $27.2 million and the loss on the sale of FinTrust of $5.10 million. See Table 21 of MD&A for the Non-GAAP Performance Measures Reconciliation for further detail on operating net income and operating diluted earnings per share.
Total revenue of $1.06 billion increased $111 million from 2024, primarily as a result of the increase in net interest revenue. FTE net interest revenue increased by $81.6 million, which was mostly driven by lower deposit interest expense. During 2025, our net interest margin increased 23 basis points to 3.52%, which reflects steeper decreases in deposit rates compared to that of loans. See section titled Net Interest Revenue and Tables 2 and 3 of MD&A for further detail on net interest revenue.
In addition, noninterest income for 2025 increased $29.3 million, or 23%, compared to 2024, which is mostly due to the absence of the 2024 loss on the manufactured housing loan sale mentioned above. See Table 4 of MD&A for further detail on noninterest income.
We recorded a provision for credit losses of $48.8 million in 2025 compared to $51.0 million for 2024. The provision for credit losses in 2025 reflects lower net charge-offs, partially offset by stronger loan growth compared to 2024. Additionally, the provision for credit losses for 2024 included a special provision of $9.80 million related to expected losses in western North Carolina, which was severely affected by Hurricane Helene. This reserve was fully released over the course of 2025 as losses were lower than expected.
Noninterest expense increased $13.8 million, or 2%, compared to 2024, which was mostly driven by the $14.4 million increase in salaries and employee benefits, reflecting higher total compensation. This was partially offset by the decrease in other noninterest expense of $7.19 million, as 2024 included the loss on the FinTrust sale. See Table 5 of MD&A for further detail on noninterest expense.
UNITED COMMUNITY BANKS, INC.
Table 1 Selected Financial Information
For the Years Ended December 31,
(dollars in thousands, except per share data)
INCOME SUMMARY
Interest revenue
Interest expense
Net interest revenue
Noninterest income
Total revenue
Provision for credit losses
Noninterest expense
Income before income tax expense
Income tax expense
Net income
Non-operating items
Income tax benefit of non-operating items
Net income - operating (1)*
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP
Diluted net income - operating (1)*
Common stock cash dividends declared
Book value
Tangible book value (3)*
Key Performance Ratios:
Return on common equity - GAAP (2)
Return on common equity - operating (1)(2)*
Return on tangible common equity - operating (1)(2)(3)*
Return on assets - GAAP
Return on assets - operating (1)*
Net interest margin (FTE)
Efficiency ratio - GAAP
Efficiency ratio - operating (1)*
Equity to total assets
Tangible common equity to tangible assets (3)*
ASSET QUALITY
Total NPAs
ACL - loans
Net charge-offs
ACL - loans to loans
Net charge-offs to average loans
NPAs to total assets
AT PERIOD END ($ in millions)
Loans
Investment securities
Total assets
Deposits
Shareholders’ equity
Common shares outstanding (thousands)
(1) Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on page 62 . (2) Net income less preferred stock dividends, divided by average common equity. (3) Excludes effect of acquisition related intangibles and associated amortization.
* Represents a non-GAAP measure. See reconciliation of non-GAAP measures to related GAAP financial measures. For more information, see Non-GAAP Performance Measures Reconciliation on page 62 .
Net Interest Revenue
FTE net interest revenue for 2025 was $913 million, compared to $832 million for 2024. The net interest spread was 2.68% and 2.27% for 2025 and 2024, respectively, while the net interest margin was 3.52% and 3.29%, respectively. Improvement in the net interest spread and net interest margin resulted from reductions totaling 175 basis points in the federal funds rate beginning in September of 2024, which drove decreases in funding costs, and to a lesser extent, loan yields. The increase in net interest revenue also reflects eight months of net interest revenue from the loans and deposits acquired from ANB, which closed on May 1, 2025. Interest expense on deposits decreased $71.8 million, which was mostly driven by a decrease in interest rates paid on deposits, partially offset by deposit growth. In addition, during late 2024 and 2025 we redeemed several debt issuances, which was the primary driver of the reduction in interest expense on long-term debt of $6.31 million.
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.
Table 2 - Average Consolidated Balance Sheets and Net Interest Margin Analysis
For the Years Ended December 31,
(dollars in thousands, (FTE))
Average
Balance
Interest
Avg.
Rate
Average
Balance
Interest
Avg.
Rate
Average
Balance
Interest
Avg.
Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)
Taxable securities (3)
Tax-exempt securities (FTE) (1)(3)
Federal funds sold and other interest-earning assets
Total interest-earning assets (FTE)
Noninterest-earning assets:
Allowance for credit losses
Cash and due from banks
Premises and equipment
Other assets (3)
Total assets
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand
Money market
Savings
Time
Brokered time deposits
Total interest-bearing deposits
Federal funds purchased and other
borrowings
FHLB advances
Long-term debt
Total borrowed funds
Total interest-bearing liabilities
Noninterest-bearing liabilities:
Noninterest-bearing deposits
Other liabilities
Total liabilities
Shareholders’ equity
Total liabilities and shareholders’ equity
Net interest revenue (FTE)
Net interest-rate spread (FTE)
Net interest margin (FTE) (4)
(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 adjustments totaled $4.11 million, $4.29 million, and $4.17 million, respectively, for 2025, 2024, and 2023. The tax rate used to calculate the adjustment was 25% in 2025 and 2024 and 26% in 2023, 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 where the accrual of interest has been discontinued.
(3) Unrealized gains and losses on AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $232 million, $306 million, and $424 million in 2025, 2024, and 2023, respectively, 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.
The following table shows the relative effect on net interest revenue resulting from changes in the average outstanding balances (volume) of interest-earning assets and interest-bearing liabilities and the rates we earned and paid on such assets and liabilities.
Table 3 - Change in Interest Revenue and Interest Expense
(dollars in thousands, (FTE))
2025 Compared to 2024
2024 Compared to 2023
Increase (decrease) due to changes in
Total
Increase (decrease) due to changes in
Total
Volume
Rate
Change
Volume
Rate
Change
Interest-earning assets:
Loans
Taxable securities
Tax-exempt securities
Federal funds sold and other interest-earning assets
Total interest-earning assets
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand
Money market
Savings deposits
Time deposits
Brokered time deposits
Total interest-bearing deposits
Federal funds purchased and other short-term
borrowings
FHLB advances
Long-term debt
Total borrowed funds
Total interest-bearing liabilities
Increase in net interest revenue
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.
Noninterest Income
The following table presents the components of noninterest income for the periods indicated.
Table 4 - Noninterest Income
For the Years Ended December 31,
(in thousands)
Change
Service charge and fees:
Overdraft fees
ATM and debit card interchange fees
Other service charges and fees
Total service charges and fees
Mortgage loan gains and related fees
Wealth management fees
Gains (losses) from sales of other loans, net
Other lending and loan servicing fees
Securities gains (losses), net
Other noninterest income:
Customer derivatives
Other investment income
BOLI
Treasury management income
Other
Total other noninterest income
Total noninterest income
The decrease in mortgage loan gains and related fees was primarily a result of a decrease in mortgage servicing income of $2.39 million, which includes fair value adjustments to our mortgage servicing asset.
Wealth management fees decreased in 2025 compared to 2024, which included nine months of fees from FinTrust prior to the sale of that business in October of 2024. However, our assets under management at December 31, 2025 increased to $3.40 billion from $3.15 billion at December 31, 2024 as we continue to grow our United Community Private Wealth division.
Gains and losses on sales of other loans generally result from the sale of SBA/USDA loans and equipment financing loans. We sell a portion of our SBA/USDA loan production each quarter, which is determined mostly by the current lending environment and balance sheet management activities. We also sell certain equipment financing receivables based on market conditions. In addition, during 2024, we sold $303 million of manufactured housing loans, substantially all of that portfolio, which resulted in a $27.2 million loss. The sale reduced risk and allowed us to redirect resources to activities that better align with our strategic objectives.
The increase in other lending and loan servicing fees was mostly driven by an increase in equipment financing fee revenue.
Customer derivative fees were up due to stronger loan growth and increased product demand, attributable to the lower interest rate environment compared to the same periods of 2024.
The decrease in other investment income was driven primarily by less favorable unrealized gains on mutual funds and equity securities during 2025 compared to 2024.
Treasury management income increased 25% compared to 2024, which reflects our continued investment in both talent and product offerings related to this line of business.
Provision for Credit Losses
We recorded a provision for credit losses of $48.8 million in 2025, compared to $51.0 million in 2024. 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 the ACL is included in the “Allowance for Credit Losses” section under “Credit Risk Management” section of this Report.
Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated.
Table 5 - Noninterest Expense
For the Years Ended December 31,
(dollars in thousands)
Change
Salaries and employee benefits
Occupancy
Communications and equipment
Professional fees
Lending and loan servicing expense
Outside services - electronic banking
Postage, printing and supplies
Advertising and public relations
FDIC assessments and other regulatory charges
Amortization of intangibles
Merger-related and other charges
Other
Total noninterest expense
The increase in salaries and employee benefits was driven by higher total compensation, reflecting 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. Full time equivalent headcount totaled 3,070 at December 31, 2025, up 3% from 2,979 at December 31, 2024.
Communications and equipment expense increased primarily due to new software contracts and incremental software contract costs on existing contracts, including volume based increases.
FDIC assessments and other regulatory charges decreased for 2025 as the comparative period of 2024 included $1.74 million of FDIC special assessment expense.
Other noninterest expense decreased for 2025 as the 2024 comparative period included a $5.39 million loss on the sale of FinTrust. In addition, during 2025, fraud losses declined compared to 2024.
Merger-related and other charges for 2025 primarily related to the ANB acquisition and branch closure costs. Merger-related and other charges for 2024 primarily consisted of costs associated with our rebranding, branch closure costs, and expense related to the sale of FinTrust.
Income Tax Expense
The following table presents income tax expense and the effective tax rate for the periods indicated.
Table 6 - Income Tax Expense
(dollars in thousands)
Income before income taxes
Income tax expense
Effective tax rate
See Note 19 for a reconciliation of income taxes calculated at our statutory federal income tax rate to income tax expense recognized in our consolidated statements of income. Reconciling items generally consist of state income taxes, as well as the effect of tax exempt income and non-deductible expenses.
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 are outlined below.
• Credit risk: The risk that a borrower or counterparty will fail to perform on an obligation. Credit risk is interrelated with asset quality risk, collection risk and concentration risk. Asset quality risk is associated with the potential for losses due to the deterioration in the value of the loan portfolio. Collection risk relates to our ability to collect on and manage delinquent accounts. Concentration risk is the risk that we could incur a loss due to a significant exposure to a single borrower or group of borrowers such as an industry or geographic region.
• Liquidity risk: The potential that we will be unable to meet our financial obligations as they become due because of an inability to liquidate assets or obtain adequate funding or that we cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions. Funding risk, which is the potential inability to generate cash flow to meet short-term obligations, and funding source risk, reflecting the potential inability to obtain and maintain funding from various sources, are included within liquidity risk.
• Market / interest rate risk: The risk resulting from adverse movements in market rates or prices. Market risk includes interest rate risk, the potential for financial losses due to fluctuations related to interest rates, and hedging risk, the potential for financial losses or reduced gains stemming from hedging strategies used to manage other risks.
• Capital risk: The risk of loss of capital/equity through events such as a reduction of earnings, growth in excess of capital generation, or other unforeseen events resulting in earnings loss and/or capital erosion. We also manage capital adequacy risk, which is the risk of not having sufficient capital to meet obligations and absorb unexpected losses. Capital inadequacy can lead to insolvency.
• Strategic risk: The potential that strategic decisions will have an adverse effect on our current or projected financial condition. This includes adverse business decisions, poor implementation of business decisions, or lack of responsiveness to changes in the financial services industry and operating environment. Planning, budgeting and competition risks fall under the strategic risk umbrella.
• Operational risk: The potential that inadequate or failed internal processes or systems, human errors or misconduct, or adverse external events will have an adverse effect on our current or projected financial condition. The following risks are included within operational risk: execution, technology, information security, data, talent/culture, model, fraud, third-party, physical, and business disruption/continuity.
• Legal and compliance risk: The potential for financial loss, reputational damage or operational disruptions due to legal actions, non-compliance with laws and regulations or contractual failures. Compliance risk also pertains to the risk that changes in laws and regulations could affect the operations of our business. We are subject to examination and reporting requirements of the Federal Reserve, FDIC, the SCBFI and the CFPB and we are also subject to various requirements and restrictions under federal and state law.
• Reputation risk: The risk arising from negative public opinion or damaged relationships due to actions of the Bank, its employees or flaws in our products and services. This risk may impair the Bank's competitiveness by affecting its ability to establish new relationships or services or continue servicing existing relationships.
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 framework’s three guiding principles are to be comprehensive, scalable and adaptable. First, the framework provides for comprehensive risk identification and reporting practices that support informed decision-making. Second, the framework establishes a foundational risk management philosophy that provides for the sustainability of a safe and profitable bank. Third, the design of the framework is adaptable allowing risk owners to manage risks to the specific needs of business units and allows for the evolution of risk management activities as the Bank’s risk profile and resources evolve over time.
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.
Credit Risk Management
Credit risk is inherent to the lending function. It is important to identify the causes for major credit problems and implement a sound risk management system so returns are maximized while risks are minimized. Growth of portfolios, entrance into new markets or business lines, acquired portfolios, new lending personnel, a competitive environment, counterparty exposures, and current economic conditions all may contribute to an elevated credit risk environment if not properly managed.
Our loan portfolio is the largest asset on our balance sheet; therefore credit risk management plays a key role in our overall risk management infrastructure. We consider it essential to maintain a strong credit culture throughout the bank. Credit culture encompasses the behavior, beliefs, philosophy, organization and policies relating to the management of the entire credit function.
We manage concentration risk through project limits, portfolio and sub-portfolio limits, and relationship exposure limits, which vary by risk rating, as well as industry concentration limits.
We have robust underwriting policies that prioritize rational decision-making, compliance with regulatory standards, portfolio diversification, and continuous monitoring, aiming to achieve a balanced approach between risk and reward while ensuring the long-term stability and success of our organization.
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 administration 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 leadership and 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.
Loans
As of December 31, 2025, loans totaled $19.4 billion, an increase of $1.21 billion, or 7%, compared to $18.2 billion at December 31, 2024. The increase reflects the addition of loans acquired from ANB, which totaled $301 million at acquisition, and organic loan growth, particularly in our commercial portfolio and in home equity loans.
Allowance for Credit Losses
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. The amount of any changes could be significant if the assessment of loan quality or collateral values changes substantially with respect to one or more loan relationships or portfolios or if there is a significant change in the reasonable and supportable forecast used to model our expected credit losses. The allocation of the ACL is based on reasonable and supportable forecasts, historical data, subjective judgment and estimates and therefore, may not be predictive of the specific amounts or loan categories in which charge-offs may ultimately occur. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require adjustments to the provision for credit losses in future periods if, in their opinion, the results of their review warrant such additions. See the Critical Accounting Estimates section for additional information on the ACL.
The ACL for loans at December 31, 2025 totaled $210 million compared to $207 million at December 31, 2024 and the ACL for loans as a percentage of total loans decreased to 1.09% from 1.14%. The increase in ACL was primarily attributable to loan growth and the initial allowance established for ANB, partially offset by the full release of the Hurricane Helene related allowance over the course of 2025. The initial ACL for ANB loans totaled $3.65 million, $1.25 million of which was reclassified from the fair value of PCD loans with no impact to earnings. The Hurricane Helene reserve was $9.80 million at December 31, 2024 and was gradually released throughout 2025 based on our assessment of potential storm-related loan losses. Our ACL for unfunded commitments totaled $15.1 million at December 31, 2025 compared to $10.4 million at December 31, 2024, mostly due to an increase in construction commitments.
The following tables provide information on loans and the ACL for the periods indicated. See Note 6 to the consolidated financial statements for further information on loans and the ACL.
The following table presents the loan portfolio and the allocation of the ACL by loan type for the periods indicated.
Table 7 - Loan Portfolio Composition and ACL Allocation
As of December 31,
(dollars in thousands)
Loans
% of portfolio
ACL
ACL to Loans
Loans
% of portfolio
ACL
ACL to Loans
Loans
% of portfolio
ACL
ACL to Loans
Owner occupied CRE
Income producing CRE
Commercial & industrial
Commercial construction & land
Equipment financing
Total commercial
Residential mortgage
Home equity
Residential construction & land
Manufactured housing (2)
Consumer
Total (1)
(1) Loans presented exclude fair value hedge basis adjustments. (2) In 2025, manufactured housing loans were included in consumer loans.
The following table sets forth the maturity distribution of our loan portfolio, as well as the interest rate sensitivity for loans maturing after one year.
Table 8 - Loan Portfolio Maturity
As of December 31, 2025
(in thousands)
Maturity
Rate Structure for Loans Maturing Over One Year (2)
One Year or Less
2 - 5 Years
6 - 15 Years
After 15 Years
Total (1)
Fixed Rate
Variable Rate
Owner occupied CRE
Income producing CRE
Commercial & industrial
Commercial construction & land
Equipment financing
Total commercial
Residential mortgage
Home equity
Residential construction & land
Consumer
Total
(1) Loans presented exclude fair value hedge basis adjustments. (2) The fixed versus variable determination does not reflect the portfolio layer fair value hedges on certain loans.
The following table summarizes net charge-offs to average loans for each of the past three years.
Table 9 - Net Charge-offs
Years Ended December 31,
(dollars in thousands)
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
Income producing CRE
Commercial & industrial
Commercial construction & land
Equipment financing
Residential mortgage
Home equity
Residential construction & land
Manufactured housing (1)
Consumer
(1) In 2025, manufactured housing loans were included in consumer loans.
During 2025, we recorded lower net charge-offs compared to 2024, as 2024 included $11.0 million in manufactured housing loan charge-offs recorded in connection with the sale of the majority of that portfolio.
Nonperforming Assets
The following table presents NPAs, which consist of nonaccrual loans, OREO and repossessed assets, for the periods indicated. Notably, in 2025 we had two payoffs of senior care loans (included in income producing CRE) totaling $14.6 million.
Table 10 - NPAs
As of December 31,
(in thousands)
Owner occupied CRE
Income producing CRE
Commercial & industrial
Commercial construction & land
Equipment financing
Total commercial
Residential mortgage
Home equity
Residential construction & land
Manufactured housing (1)
Consumer
Total nonaccrual loans
OREO and repossessed assets
Total NPAs
Nonaccrual loans to total loans
NPAs to total assets
ACL - loans to nonaccrual loans coverage ratio
(1) In 2025, manufactured housing loans were included in consumer loans.
Concentration Considerations
Our commercial loan portfolio makes 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 76% of our loan portfolio is secured by real estate and therefore, can be affected by changes in real estate valuations.
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. Therefore, our exposure to credit risk is significantly affected by changes in the economy within these markets.
As of December 31, 2025, the average credit exposure of our 25 largest credit relationships was $51.5 million, with an aggregate total credit exposure of $1.29 billion, including $282 million in unfunded commitments and $1.01 billion in balances outstanding, excluding participations sold.
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. Common risks for this loan category include declines in general economic conditions, declines in real estate value, declines in lease rates, declines in occupancy rates, supply and demand for various industries and lack of suitable alternative use for the property. We monitor our income producing CRE portfolio through debt covenant monitoring and performing annual review procedures.
Table 11 - Industry Concentrations of Non-Owner Occupied CRE Loans
As of December 31,
(dollars in thousands)
Total
% of loans in category
Total
% of loans in category
Retail
Office
Multifamily
Warehouse and industrial
Hotel
Builder finance
Rental 1-4 family
Self storage
Other
Senior care
Land
Total
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 and to take advantage of revenue producing opportunities as they arise. 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 also conduct scenario analyses and tabletop exercises to help identify, measure, and control risks associated with hypothetical stress events that would have an adverse impact on liquidity. Similarly, periodic testing of secondary funding sources is conducted to reduce the operational risks associated with unexpected industry-wide liquidity events, such as the bank failures that occurred in 2023. 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 liquidity conditions for a minimum of 30 days. While the 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 2024, 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 and 2024, we had $85.0 million and $195 million, respectively, of outstanding federal funds purchased. 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.
At December 31, 2025 and 2024, we had sufficient qualifying collateral to support additional borrowings, which is detailed in the table below.
Table 12 - Liquid Funds and Unused Borrowing Capacity
(in thousands)
Available liquid funds:
December 31, 2025
December 31, 2024
Cash and cash equivalents
Availability of borrowings (1) :
FHLB
Federal Reserve - Discount Window
Unpledged securities available as collateral for additional borrowings
(1) Based on collateral pledged.
Additionally, 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 to its common 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. 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. In 2025 and 2024, the Bank paid dividends of $356 million and $153 million, respectively, to the Holding Company. 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 December 31, 2025 was sufficient to meet our expected cash requirements.
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. Compared to December 31, 2024, customer deposits increased $330 million, which reflects deposits acquired in the ANB transaction and organic growth. Money market accounts increased the most significantly due to continued high demand as money markets are more liquid than time deposits and offer a higher interest rate than demand and savings accounts. As of December 31, 2025, we had approximately $9.81 billion in uninsured deposits, of which $3.02 billion was collateralized by investment securities. The following table sets forth the deposit composition for the periods indicated.
Table 13 - Deposits
As of December 31,
(dollars in thousands)
Balance
Customer Deposit Composition
Balance
Customer Deposit Composition
Noninterest-bearing demand
NOW and interest-bearing demand
Money market and savings
Time
Total customer deposits
Brokered deposits
Total deposits
The following table sets forth the scheduled maturities of time deposits greater than $250,000.
Table 14 - Maturities of Time Deposits Greater than $250,000
As of December 31, 2025
(in thousands)
Three months or less
Over three through six months
Over six months through twelve months
Over one year
Total
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. 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 hedges and hedged items are reflected in investment securities interest income. The changes in the fair value of the hedges and the hedged items substantially offset each other. See Notes 5 and 8 to the consolidated financial statements for further detail on investment securities and derivatives, respectively.
The table below summarizes the carrying value of our securities portfolio and other relevant portfolio metrics 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 15 - Investment Securities
As of December 31,
(dollars in thousands)
Carrying Value
% of portfolio
Carrying Value
% of portfolio
$ Change
AFS
HTM
Total investment securities
Investment securities as a % of total assets
Weighted average life
5.4 years
5.7 years
Swap adjusted effective duration
Effective duration
The decrease in the investment securities portfolio reflects our current balance sheet management optimization strategy that prioritizes reinvesting principal and interest from securities to fund loan growth.
At December 31, 2025, HTM debt securities had a fair value of $1.92 billion, indicating pre-tax net unrealized losses of $319 million. Additional pre-tax unrealized losses on HTM debt securities of $51.7 million 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.
The following table presents the amortized cost of securities by contractual maturity of investment securities and weighted-average yields on an 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. 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.
Table 16 - Contractual Maturity and Weighted-Average Yield of AFS and HTM Debt Securities
As of December 31, 2025
(dollars in thousands)
Maturity By Years
1 or Less
Over 10
Total
Amortized Cost
Yield
Amortized Cost
Yield
Amortized Cost
Yield
Amortized Cost
Yield
Amortized Cost
Yield
AFS
U.S. Treasuries
U.S. Government agencies & GSEs
State and political subdivisions
Residential MBS, Agency & GSE
Residential MBS, Non-agency
Commercial MBS, Agency & GSE
Commercial MBS, Non-agency
Corporate bonds
Asset-backed securities
Total AFS securities
HTM
U.S. Treasuries
U.S. Government agencies & GSEs
State and political subdivisions
Residential MBS, Agency & GSE
Commercial MBS, Agency & GSE
Supranational entities
Total HTM securities
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. The actual maturities of these securities will differ from the contractual maturities because the loans underlying the securities can prepay. Decreases in interest rates will generally cause an acceleration of prepayment levels. In a declining or prolonged low interest rate environment, we may not be able to reinvest the proceeds from these prepayments in assets that have comparable yields. 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.
ACL- Investments
Our HTM debt securities portfolio is evaluated quarterly to assess whether an ACL is required. At both December 31, 2025 and 2024, calculated credit losses on HTM debt securities were deemed de minimis due to the high credit quality of the portfolio, which included securities issued or guaranteed by U.S. Government agencies, GSEs, high credit quality municipalities and supranational entities. As a result, no ACL for HTM debt securities was recorded.
For AFS debt securities in an unrealized loss position, absent circumstances when the securities would be sold, we evaluate whether the decline in fair value has resulted from credit losses or other factors. If the evaluation indicates a credit loss exists, an ACL may be
recorded. At both December 31, 2025 and 2024, there was no ACL related to the AFS debt securities portfolio. Unrealized losses at December 31, 2025 and 2024 primarily reflected the effect of changes in interest rates.
See Note 1 to the consolidated financial statements for further information on the ACL for investment securities.
Long-term Debt
At December 31, 2025 and 2024, we had long-term debt outstanding of $120 million and $254 million, respectively. As of December 31, 2025 long-term debt consisted of subordinated debentures and trust preferred securities, all of which were obligations of the Holding Company. During 2025, we redeemed two senior debt series prior to maturity, which totaled $135 million. In connection with these redemptions, we recognized a $768,000 loss representing the unamortized debt issuance costs as of each instrument’s respective redemption date.
The following table provides long-term debt outstanding by maturity in five-year increments as of the date indicated. Additional information regarding debt instruments is provided in Note 12 to the consolidated financial statements.
Table 17 - Long-term Debt by Maturity Category
As of December 31, 2025
(in thousands)
Next 5 years
6 - 10 years
11 - 15 years
Less discount
Total long-term debt
Operating Lease Obligations
We are a party to operating lease agreements for many of our branch locations, ATMs, ITMs, loan production offices and operation centers. 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, 2025, the lease liability and ROU asset totaled $38.4 million and $37.0 million, respectively, compared to $45.2 million and $42.8 million, respectively, at December 31, 2024. During 2025, we recorded $3.63 million in ROU assets in exchange for operating lease liabilities of approximately the same amount.
As of December 31, 2025, the remaining terms of our leases with remaining lease liabilities ranged from three months to 10 years. Certain leases contain options to renew the lease at the end of the current term. 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 13 to the consolidated financial statements.
Off-Balance Sheet Arrangements
We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of customers. These financial instruments included commitments to extend credit and letters of credit, which totaled $4.79 billion at December 31, 2025.
A commitment to extend credit is an agreement to lend to a customer as long as there is no violation of any condition established in the contract. 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.
The exposure to credit loss in the event of nonperformance by the other party to the commitments to extend credit, letters of credit and financial guarantees is represented by the contractual amount of these instruments. We use the same credit underwriting procedures for making commitments, letters of credit and financial guarantees as we use for underwriting on-balance sheet instruments. Management evaluates each customer’s creditworthiness on a case-by-case basis and the amount of the collateral, if deemed necessary, is based on
the credit evaluation. Collateral held varies, but may include unimproved and improved real estate, certificates of deposit, personal property or other acceptable collateral.
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. We also hold investments in fintech fund limited partnerships. As of December 31, 2025, for certain of these investments, we had committed to fund an additional $50.8 million related to future capital calls that has not been reflected in the consolidated balance sheet.
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. See Note 22 to the consolidated financial statements for additional information on off-balance sheet arrangements.
Market / Interest Rate Risk Management
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.
The ALCO meets periodically and has responsibility for formulating and recommending asset/liability management policies to the Board, formulating and implementing approved strategies to improve balance sheet positioning and/or earnings, and reviewing interest rate sensitivity. It is responsible for overseeing strategies, policies, and procedures for managing interest rate risk, as well as appropriately developing, executing and maintaining:
• Appropriate policies, procedures, and internal controls addressing interest rate risk management, including limits and controls over interest rate risk exposures and for monitoring that such exposures remain within our risk tolerances;
• Comprehensive systems and standards for measuring interest rate risk, valuing positions, and assessing performance, including procedures for updating interest rate risk measurement scenarios and sensitivity analysis, and reviewing key model assumptions.
ALCO reviews and considers potential strategies for mitigating interest rate risk, considering the risk versus reward trade-off in light of current or expected market conditions. It also considers the interest rate environment when determining the level of interest rate risk it deems appropriate at any given time. In addition, ALCO takes into consideration the current and forecasted capital levels including the interest rate risk relative to the forecasted earnings and capital.
Our Treasury department monitors the Bank’s interest rate risk exposures by utilizing simulations using various scenarios and sensitivity analyses to quantify such exposures. The Treasury department presents potential interest rate risk mitigation strategies and makes recommendations to ALCO with respect to hedges or balance sheet strategies for managing the Bank’s interest rate risk exposures and oversees such potential strategies remain consistent with the strategic objectives of the Bank.
Interest Rate Sensitivity
Interest rate sensitivity is a function of the repricing characteristics of the portfolio of assets and liabilities. These repricing characteristics are the time frames within which the interest-earning assets and interest-bearing liabilities are subject to change in interest rates either at replacement, repricing or maturity. Interest rate sensitivity management focuses on the maturity structure of assets and liabilities and their repricing characteristics during periods of changes in market interest rates. Effective interest rate sensitivity management is intended to ensure that both assets and liabilities respond to changes in interest rates on a net basis within an acceptable timeframe, thereby minimizing the potentially adverse effect of interest rate changes on net interest revenue.
The absolute level and volatility of interest rates can have a significant effect on profitability. 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.
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 utilizes 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
ALCO periodically reviews the assumptions for reasonableness based on historical data and future expectations; however, actual net interest revenue may differ from model results.
The net interest revenue simulation model includes significant key assumptions which may change over time and differ from actual future results. Examples include the shape of modeled yield curves, balance sheet mix and balance sheet behaviors (timing and magnitude). In these scenarios, balances and balance sheet mix are generally consistent throughout the forecast horizon for all scenarios. The impact from existing and forward-starting derivatives are also included in simulated model output.
We utilize derivative financial instruments as a cost-effective and capital-effective means of modifying the repricing characteristics of on-balance sheet assets and liabilities. 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).
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. 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. 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. See Note 8 to the consolidated financial statements for further detail.
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 should not have any material unintended effect on our financial condition or results of operations. To mitigate potential credit risk, we may require certain counterparties to derivative contracts to pledge cash or securities as collateral to cover the net exposure. However, most of our derivatives clear centrally through the CME where variation margin, as determined by the CME, is settled daily. See Note 8 to the consolidated financial statements for further detail.
The following table presents the modeled 12-month impact on net interest revenue for the interest rate shocks and ramps shown compared to a base scenario that assumes rates remain unchanged. The scenario results presented assume parallel movements in the yield curve, which may differ from actual future curve behavior.
Table 18 - Interest Sensitivity
Increase (Decrease) in Net Interest Revenue from Base Scenario at
December 31,
Change in Rates
Shock
Ramp
Shock
Ramp
200 basis point increase
100 basis point increase
100 basis point decrease
200 basis point decrease
Asset sensitivity at the end of 2025 was reduced compared to the previous year, primarily driven by the shortened duration and increased repricing frequency in liabilities. A change in the simulation model and ongoing methodology refinements, including enhanced deposit segmentation in 2025, also impacted the comparisons. .
Effect of Inflation and Changing Prices
A bank’s asset and liability structure is substantially different from that of an industrial firm, because a bank’s assets and liabilities are primarily monetary in nature, with relatively little investment in fixed assets or inventories. Inflation has an important effect on the growth of total assets and the resulting need to increase equity capital at higher than nominal rates in order to maintain an appropriate equity to assets ratio.
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. In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs.
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 we are exposed to 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 December 31, 2025 was $3.64 billion, an increase of $207 million from December 31, 2024. The increase was primarily a result of net income of $328 million, other comprehensive income of $62.3 million, mostly driven by unrealized holding gains on AFS debt securities, and equity of $65.7 million issued for the acquisition of ANB. These increases were partially offset by dividends on common and preferred stock of $125 million, the redemption of $91.5 million of preferred stock and repurchases of $44.3 million of common stock.
Regulatory Capital
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. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with the category. The resulting weighted values from each of the risk categories are added together, and generally this sum is our total RWAs. RWAs for purposes of our capital ratios are calculated under these guidelines.
CET1 capital consists of common shareholders’ equity, excluding AOCI, intangible assets (goodwill, deposit-based intangibles and certain other intangibles, including certain servicing assets), net of associated deferred tax liabilities, and disallowed deferred tax assets. Tier 1 capital consists of CET1 plus non-cumulative perpetual preferred stock. Tier 2 capital includes the allowable portion of the ACL up to 1.25% of RWA as well as qualifying subordinated debt and trust preferred securities. Tier 1 capital plus Tier 2 capital is referred to as Total risk-based capital.
As of December 31, 2025, we had outstanding subordinated debt of $100 million, of which $40.0 million qualified as Tier 2 capital after applying a discount related to the debt maturing in 2028. In addition, we had outstanding junior subordinated debentures related to trust preferred securities totaling $25.8 million at December 31, 2025, of which $25.0 million (excluding common securities owned by United) qualified as Tier 2 capital. Further information on subordinated debt and trust preferred securities is provided in Note 12 to the consolidated financial statements.
The following table outlines the minimum ratios required for capital adequacy purposes, as well as the thresholds for a categorization of “well-capitalized”.
Table 19 - Capital Ratios
As of December 31,
United Community Banks, Inc. (consolidated)
United Community Bank
Minimum Capital
Well-Capitalized
Minimum Capital Plus Capital Conservation Buffer
Risk-based ratios:
CET1 capital
Tier 1 capital
Total capital
Leverage ratio
Additional information related to capital ratios, as calculated under regulatory guidelines, is provided in Note 21 to the consolidated financial statements. As of December 31, 2025 and 2024, both United and the Bank were characterized as “well-capitalized”. The following table shows capital composition as of December 31, 2025 and 2024.
Table 20 - Capital Composition under Basel III
As of December 31,
(in thousands)
United Community Banks, Inc. (Consolidated)
United Community Bank
Total common shareholders' equity
CECL transitional amount (1)
Goodwill
Intangibles, other than goodwill and mortgage servicing rights, net of associated DTLs
DTAs arising from net operating loss and tax credit carryforwards
Net unrealized losses on AFS securities
Accumulated net gains on cash flow hedges
Net unrealized losses on HTM securities that are included in AOCI
Other
CET1 capital
Preferred stock, net of issuance cost
Tier 1 capital
Tier 2 capital instruments
Qualifying ACL
Total capital
(1) The CECL transition was fully phased in for December 31, 2025.
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. These estimates are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates or judgments.
Certain areas of accounting inherently have a greater reliance on the use of estimates, assumptions or judgments and as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the determination of our ACL to require 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. Therefore, we consider the ACL to be a critical accounting estimate, which we discuss directly with the Audit Committee of our Board.
Our most significant accounting policies are presented in Note 1 to the accompanying consolidated financial statements. These policies, along with the disclosures presented in the other notes to the consolidated financial statements and in this MD&A, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined.
Allowance for Credit Losses
The ACL represents management’s current estimate of credit losses for the remaining estimated life of financial instruments, with particular applicability on our balance sheet to loans and unfunded loan commitments. Estimating the amount of the ACL requires significant judgment and the use of estimates related to historical experience, current conditions, reasonable and supportable forecasts, and the value of collateral on collateral-dependent loans. The loan portfolio also represents the largest asset type on our consolidated balance sheet. Loan losses are charged against the allowance, while recoveries of amounts previously charged off are credited to the allowance. A provision for credit losses is charged to operations based on management’s periodic evaluation of the factors previously mentioned, as well as other pertinent factors.
There are many factors affecting the ACL; some are quantitative while others require qualitative judgment. For example, our ACL model is particularly sensitive to our recent charge-off experience and changes in the forecasted unemployment rate. Although
management believes its process for determining the allowance adequately considers all the potential factors that could potentially result in credit losses, the process includes subjective elements and is susceptible to significant change. 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. Changes in the economic forecast could significantly affect estimated expected credit losses and lead to materially different amounts from one period to the next. At December 31, 2025, we used a baseline economic forecast in our ACL calculation that was generally consistent with economists’ consensus. To provide additional context regarding the sensitivity of the ACL, we simulated our ACL process while considering a more pessimistic forecast of expected economic outcomes. In this downside scenario, the unemployment rate is expected to peak at 7.2% in 2026 compared to 4.8% in the baseline scenario. Excluding consideration of qualitative adjustments, this sensitivity analysis would result in a hypothetical increase to our ACL of $36.0 million at December 31, 2025. This scenario does not reflect our current expectations at December 31, 2025, nor does it capture all the potential unknowns that could arise in the forecast period. It is meant for informational purposes as an approximation of a possible outcome under hypothetical downside conditions.
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.
Table 21 - Non-GAAP Performance Measures Reconciliation
Selected Financial Information
For the Years Ended December 31,
(dollars in thousands, except per share data)
Noninterest income reconciliation
Noninterest income (GAAP)
Loss on sale of manufactured housing loans
Gain on lease termination
Bond portfolio restructuring loss
Noninterest income - operating
Noninterest expense reconciliation
Noninterest expense (GAAP)
Loss on FinTrust including goodwill impairment
FDIC special assessment
Merger-related and other charges
Noninterest expense - operating
Net income reconciliation
Net income (GAAP)
Loss on sale of manufactured housing loans
Bond portfolio restructuring loss
Gain on lease termination
Loss on sale of FinTrust, including goodwill impairment
FDIC special assessment
Merger-related and other charges
Income tax benefit of non-operating items
Net income - operating
Diluted income per common share reconciliation
Diluted income per common share (GAAP)
Loss on sale of manufactured housing loans
Deemed dividend on preferred stock redemption
Bond portfolio restructuring loss
Gain on lease termination
Loss on sale of FinTrust, including goodwill impairment
FDIC special assessment
Merger-related and other charges
Diluted income per common share - operating
Book value per common share reconciliation
Book value per common share (GAAP)
Effect of goodwill and other intangibles
Tangible book value per common share
Return on tangible common equity reconciliation
Return on common equity (GAAP)
Loss on sale of manufactured housing loans
Deemed dividend on preferred stock redemption
Bond portfolio restructuring loss
Gain on lease termination
Loss on sale of FinTrust, including goodwill impairment
FDIC special assessment
Merger-related and other charges
Return on common equity - operating
Effect of goodwill and other intangibles
Return on tangible common equity - operating
Table 21 - Non-GAAP Performance Measures Reconciliation
Selected Financial Information
For the Years Ended December 31,
(dollars in thousands, except per share data)
Return on assets reconciliation
Return on assets (GAAP)
Loss on sale of manufactured housing loans
Bond portfolio restructuring loss
Gain on lease termination
Loss on sale of FinTrust, including goodwill impairment
FDIC special assessment
Merger-related and other charges
Return on assets - operating
Efficiency ratio reconciliation
Efficiency ratio (GAAP)
Loss on sale of manufactured housing loans
Gain on lease termination
Loss on sale of FinTrust, including goodwill impairment
FDIC special assessment
Merger-related and other charges
Efficiency ratio - operating
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)
Effect of goodwill and other intangibles
Effect of preferred equity
Tangible common equity to tangible assets
