Assets and Liabilities Measured at Fair Value

6 Months Ended

Jun. 30, 2025

Assets and Liabilities Measured at Fair Value

Accounting standards define fair value as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants on the measurement date. Fair values are categorized within a three-level measurement hierarchy:

Level 1 Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that United has the ability to access.

Level 2 Valuation is based upon quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.

Level 3 Valuation is generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

United has processes in place to review the significant valuation inputs and to assesses on a quarterly basis how instruments are classified within the valuation framework. Transfers into or out of fair value hierarchy levels are made as the observability of input assumptions change. During the six months ended June 30, 2025, there were no changes to valuation approaches or techniques that warranted a hierarchy level change.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The table below presents United’s assets and liabilities measured at fair value on a recurring basis as of the dates indicated, aggregated by the level in the fair value hierarchy within which those measurements fall.


(in thousands)
June 30, 2025	Level 1		Level 2		Level 3		Total
Assets:
AFS debt securities:
U.S. Treasuries	$	334,492	$	—	$	—	$	334,492
U.S. Government agencies & GSEs	—		295,691		—		295,691
State and political subdivisions	—		157,422		—		157,422
Residential MBS	—		2,079,812		—		2,079,812
Commercial MBS	—		769,056		—		769,056
Corporate bonds	—		136,595		1,235		137,830
Asset-backed securities	—		301,020		—		301,020
Equity securities	—		2,272		—		2,272
Mortgage loans held for sale	—		37,143		—		37,143
Mutual funds	14,415		—		—		14,415
Servicing rights for SBA/USDA loans	—		—		4,806		4,806
Residential mortgage servicing rights	—		—		39,677		39,677
Contingent consideration receivable	—		—		7,297		7,297
Derivative financial instruments	—		30,694		9,130		39,824
Total assets	$	348,907	$	3,809,705	$	62,145	$	4,220,757

Liabilities:
Deferred compensation plan liability	$	14,417	$	—	$	—	$	14,417
Derivative financial instruments	—		51,660		9,217		60,877

Total liabilities	$	14,417	$	51,660	$	9,217	$	75,294


(in thousands)
December 31, 2024	Level 1		Level 2		Level 3		Total
Assets:
AFS debt securities:
U.S. Treasuries	$	503,669	$	—	$	—	$	503,669
U.S. Government agencies & GSEs	—		320,267		—		320,267
State and political subdivisions	—		158,232		—		158,232
Residential MBS	—		2,229,959		—		2,229,959
Commercial MBS	—		822,897		—		822,897
Corporate bonds	—		150,394		2,226		152,620
Asset-backed securities	—		248,647		—		248,647
Equity securities	—		2,341		—		2,341
Mortgage loans held for sale	—		57,534		—		57,534
Mutual funds	15,335		—		—		15,335
Servicing rights for SBA/USDA loans	—		—		4,697		4,697
Residential mortgage servicing rights	—		—		39,294		39,294
Contingent consideration receivable	—		—		7,470		7,470
Derivative financial instruments	—		35,227		11,656		46,883
Total assets	$	519,004	$	4,025,498	$	65,343	$	4,609,845

Liabilities:
Deferred compensation plan liability	$	15,331	$	—	$	—	$	15,331
Derivative financial instruments	—		65,548		12,286		77,834
Total liabilities	$	15,331	$	65,548	$	12,286	$	93,165

Level 3 Fair Value Measurements

The following table presents quantitative information about significant unobservable inputs related to United’s material categories of Level 3 financial instruments measured at fair value on a recurring basis as of the dates indicated.


Level 3 Assets and Liabilities	Valuation Technique	Significant Unobservable Inputs	June 30, 2025		December 31, 2024
			Range	Weighted Average	Range	Weighted Average


Residential mortgage servicing rights	Discounted cash flow	Discount rate	10.0 - 12.5	10.1	10.0 - 14.0	10.1
		Prepayment rate	6.5 - 25.8	7.5	6.5 - 77.6	7.6



Derivative assets - mortgage	Internal model	Pull through rate	73.0 - 100	90.2	70.4 - 100	91.6
Derivative assets and liabilities - other	Dealer priced	Dealer priced	N/A	N/A	N/A	N/A
Contingent consideration receivable	Discounted cash flow	Discount rate	0.0 - 7.1	6.4	0.0 - 7.1	6.4
		Probability of achievement	89.3 - 100	92.6	89.3 - 100	92.6

The table below presents a reconciliation of the beginning and ending balances of Level 3 assets and liabilities measured at fair value on a recurring basis for the periods indicated.


	2025												2024
(in thousands)	Derivative Assets		Derivative Liabilities		SBA/USDA Loan Servicing Rights		Residential Mortgage Servicing Rights		Corporate Bonds		Contingent Consideration Receivable		Derivative Assets		Derivative Liabilities		SBA/USDA Loan Servicing Rights		Residential Mortgage Servicing Rights		Corporate Bonds
Three Months Ended June 30,
Beginning balance	$	11,319	$	10,825	$	4,920	$	39,660	$	2,230	$	7,390	$	12,811	$	13,185	$	5,507	$	37,358	$	2,160

Additions	1,403		—		410		1,440		—		—		1,362		—		345		1,060		—

Sales and settlements	(1,990)		—		(221)		(653)		(1,000)		(93)		(1,394)		—		(313)		(1,037)		—
Fair value adjustments included in OCI	—		—		—		—		5		—		—		—		—		—		37
Fair value adjustments included in earnings	(1,602)		(1,608)		(303)		(770)		—		—		154		128		(292)		633		—
Ending balance	$	9,130	$	9,217	$	4,806	$	39,677	$	1,235	$	7,297	$	12,933	$	13,313	$	5,247	$	38,014	$	2,197

Six Months Ended June 30,
Beginning balance	$	11,656	$	12,286	$	4,697	$	39,294	$	2,226	$	7,470	$	10,642	$	11,172	$	5,444	$	35,897	$	2,205

Additions	3,245		321		852		2,492		—		—		2,828		—		515		1,778		—

Transfers from Level 2	—		—		—		—		—		—		484		925		—		—		—
Sales and settlements	(2,595)		—		(358)		(1,261)		(1,000)		(173)		(2,317)		—		(554)		(1,797)		—
Fair value adjustments included in OCI	—		—		—		—		9		—		—		—		—		—		(8)
Fair value adjustments included in earnings	(3,176)		(3,390)		(385)		(848)		—		—		1,296		1,216		(158)		2,136		—
Ending balance	$	9,130	$	9,217	$	4,806	$	39,677	$	1,235	$	7,297	$	12,933	$	13,313	$	5,247	$	38,014	$	2,197

Fair Value Option

United generally records mortgage loans held for sale at fair value under the fair value option. Interest income on these loans is calculated based on the note rate of the loan and is recorded in interest revenue. The following tables present the fair value and outstanding principal balance of loans accounted for under the fair value option, as well as the gain or loss recognized from the change in fair value for the periods indicated.


Mortgage Loans Held for Sale
(in thousands)	June 30, 2025		December 31, 2024
Outstanding principal balance	$	35,885	$	56,097
Fair value	37,143		57,534


Gain (Loss) from Change in Fair Value on Mortgage Loans Held for Sale
Location	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024
Mortgage loan gains (losses) and other related fees	$	—	$	204	$	(179)	$	172

Changes in fair value were mostly offset by hedging activities. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

United may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from the application of the lower of the amortized cost or fair value accounting or write-downs of individual assets due to impairment. The following table presents the fair value hierarchy and carrying value of assets that were still held as of June 30, 2025 and December 31, 2024, for which a nonrecurring fair value adjustment was recorded during the year-to-date periods presented.


(in thousands)	Level 1		Level 2		Level 3		Total
June 30, 2025
Loans held for investment	$	—	$	—	$	8,213	$	8,213


December 31, 2024
Loans held for investment	$	—	$	—	$	27,313	$	27,313

Loans held for investment that are reported above are generally impaired loans that have either been partially charged off or have specific reserves assigned to them.

Assets and Liabilities Not Measured at Fair Value

The following disclosure provides estimated fair values for financial instruments not carried at fair value on the Consolidated Balance Sheets. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect the premium or discount on any particular financial instrument that could result from the sale of United’s entire holdings. All estimates are inherently subjective in nature. Changes in assumptions could significantly affect the estimates.


			Fair Value Level
(in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
June 30, 2025
Assets:
HTM debt securities	$	2,306,730	$	18,724	$	1,917,024	$	—	$	1,935,748
Loans and leases, net	18,704,375		—		—		18,082,340		18,082,340


Liabilities:
Deposits	23,963,012		—		23,959,284		—		23,959,284

Long-term debt	155,143		—		—		151,070		151,070

December 31, 2024
Assets:
HTM debt securities	$	2,368,107	$	18,162	$	1,925,964	$	—	$	1,944,126
Loans and leases, net	17,968,982		—		—		17,325,630		17,325,630

Liabilities:
Deposits	23,460,975		—		23,453,487		—		23,453,487

Long-term debt	254,152		—		—		248,657		248,657

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details

UNITED COMMUNITY BANKS INC 10-Q