UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2022~~2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________ to ___________

Commission file number 001-35095

UNITED COMMUNITY BANKS, INC.

(Exact name of registrant as specified in its charter)


Georgia						58-1807304
(State of incorporation)						(I.R.S. Employer Identification No.)


125 Highway 515 East
Blairsville, Georgia						30512
(Address of principal executive offices)						(Zip code)

(706) 781-2265

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, par value $1 per share	UCBI	Nasdaq Global Select Market
Depositary shares, each representing 1/1000th interest in a share of Series I Non-Cumulative Preferred Stock	UCBIO	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were ~~106,027,415~~115,154,699 shares of the registrant’s common stock, par value $1 per share, outstanding as of April 30, ~~2022.~~2023.

UNITED COMMUNITY BANKS, INC.

FORM 10-Q

INDEX


		Glossary of Defined Terms	3
		Cautionary Note Regarding Forward-looking Statements	4
PART I - Financial Information
	Item 1.	Financial Statements

		Consolidated Balance Sheets (unaudited)	5

		Consolidated Statements of Income (unaudited)	6

		Consolidated Statements of Comprehensive Income (unaudited)	7

		Consolidated Statements of Changes in Shareholders’ Equity (unaudited)	8

		Consolidated Statements of Cash Flows (unaudited)	9

		Notes to Consolidated Financial Statements	10

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3637

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54

	Item 4.	Controls and Procedures	54

PART II - Other Information

	Item 1.	Legal ~~Proceedings.~~Proceedings	55
	Item 1A.	Risk ~~Factors.~~Factors	55




	Item 6.	~~Exhibits.~~Exhibits	55

Glossary of Defined Terms

The following terms may be used throughout this report, including the consolidated financial statements and related notes.


Term						Definition
~~2021~~2022 10-K						United’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February ~~25, 2022~~24, 2023
ACL						Allowance for credit losses
AFS						Available-for-sale
ALCO						Asset/Liability Management Committee
AOCI						Accumulated other comprehensive income (loss)


~~Aquesta~~						~~Aquesta Financial Holdings, Inc. and its wholly-owned subsidiary, Aquesta Bank~~
ASU						Accounting standards update
Bank						United Community Bank
Board						United Community Banks Inc., Board of Directors
BOLI						Bank-owned life insurance
CECL						Current expected credit loss ~~model~~
CET1						Common equity tier 1
CME						Chicago Mercantile Exchange
Company						United Community Banks Inc. (interchangeable with "United" below)
CVA						Credit valuation adjustment
FASB						Financial Accounting Standards Board
FDIC						Federal Deposit Insurance Corporation
FDM						Modification made to borrowers experiencing financial difficulty
Federal Reserve						Federal Reserve System
First Miami						First Miami Bancorp, Inc.
FHLB						Federal Home Loan Bank
~~FinTrust~~FOMC						~~FinTrust Capital Partners, LLC, and its operating subsidiaries, FinTrust Capital Advisors, LLC, FinTrust Capital Benefits Group, LLC and FinTrust Brokerage Services, LLC~~Federal Reserve’s Federal Open Markets Committee
FTE						Fully taxable equivalent
GAAP						Accounting principles generally accepted in the United States of America
GSE						U.S. government-sponsored enterprise
HELOC						Home equity lines of credit
HFI						Held for investment
Holding Company						United Community Banks, Inc. on an unconsolidated basis
HTM						Held-to-maturity
LIBOR						London Interbank Offered Rate
LIHTC						Low- income housing tax credit
MD&A						Management's Discussion and Analysis of Financial Condition and Results of Operations
MBS						Mortgage-backed securities
NOW						Negotiable order of withdrawal
NPA						Nonperforming asset
OCI						Other comprehensive income (loss)
OREO						Other real estate owned
PCD						Purchased credit deteriorated
~~PPP~~						~~Paycheck Protection Program~~
Progress						Progress Financial Corporation and its wholly-owned subsidiary, Progress Bank & Trust
Reliant						Reliant Bancorp, Inc. and its wholly-owned subsidiary, Reliant Bank
Report						Quarterly Report on Form 10-Q for the quarterly period ending March 31, 2023
SBA						United States Small Business Administration

SEC						Securities and Exchange Commission



TDR						Troubled debt restructuring


U.S. Treasury						United States Department of the Treasury
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. Forward-looking statements are neither statements of historical or current 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 (including the expected completion date of the First Miami transaction), 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. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements 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 ~~non-performing assets,~~NPAs, charge-offs and provision expense;

•changes in loan underwriting, credit review or loss policies associated with economic conditions, examination conclusions or regulatory developments, either as they currently exist or as they may be affected by conditions associated with the COVID-19 pandemic;

•the continuing effects of the COVID-19 pandemic and ~~its continuing~~the potential effects of other pandemics or public health conditions on the economic and business environments in which we operate;

•strategic, market, operational, liquidity and interest rate risks associated with our business;

•~~continuation of historically low interest rates coupled with other~~ potential fluctuations or unanticipated changes in the interest rate environment, including interest rate changes made by the Federal Reserve, ~~the discontinuation~~replacements of LIBOR ~~as an~~and replacement or reform of other interest rate ~~benchmark, and~~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;

•~~our lack of geographic diversification and~~ 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 ~~greater~~ 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 ~~recent, pending or potential~~our ability to identify and complete future mergers or acquisitions ~~including~~as well as our ability to successfully ~~complete acquisitions~~expand and ~~therefore, to~~ integrate ~~or expand~~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 ofor 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;

•the availability of and access to capital;

•legislative, ~~(e.g., tax),~~ 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 ~~arising out of the COVID-19 pandemic, inflation, changing interest rates or other factors;~~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 litigation, regulatory proceedings, examinations, investigations, or similar matters, or developments related thereto;

•any ~~event or development~~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 ~~the~~its ability to pay dividends to shareholders or ~~undertake~~take other capital ~~initiatives,~~actions;

•the potential effects of events beyond our control that may have a destabilizing effect on financial markets and the economy, such as ~~share repurchases;~~war or terrorist activities, the Russian invasion of Ukraine, disruptions in our customers’ supply chains, disruptions in transportation, essential utility outages or trade disputes and related 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. Additional factors that may cause actual results to differ materially from those contemplated by any forward-looking statements also may be found in our ~~2021~~2022 10-K (including the “Risk Factor” section of that report), Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available at the SEC’s website at http://www.sec.gov. We do not intend to and, except as required by law, hereby disclaim any obligation to update or revise any forward-looking statement contained in this Report, which speaks only as of the date ~~hereof,~~of its filing with the SEC, whether as a result of new information, future events, or otherwise. The financial statements and information contained herein have not been reviewed, or confirmed for accuracy or relevance, by the FDIC or any other regulator.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements


UNITED COMMUNITY BANKS, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	175,175	$	144,244	Cash and due from banks	$	275,962	$	195,771
Interest-bearing deposits in banks	Interest-bearing deposits in banks	1,729,607		2,147,266		Interest-bearing deposits in banks	501,719		316,082
Federal funds and other short-term investments	Federal funds and other short-term investments	1,882		27,000		Federal funds and other short-term investments	—		135,000
Cash and cash equivalents	Cash and cash equivalents	1,906,664		2,318,510		Cash and cash equivalents	777,681		646,853
Debt securities available-for-sale	Debt securities available-for-sale	3,909,114		4,496,824		Debt securities available-for-sale	3,331,139		3,614,333
Debt securities held-to-maturity (fair value $2,351,873 and $1,148,804, respectively)		2,500,983		1,156,098
Debt securities held-to-maturity (fair value $2,206,874 and $2,191,073, respectively)						Debt securities held-to-maturity (fair value $2,206,874 and $2,191,073, respectively)	2,584,081		2,613,648
Loans held for sale	Loans held for sale	75,191		44,109		Loans held for sale	20,390		13,600
Loans and leases held for investment	Loans and leases held for investment	14,316,205		11,760,346		Loans and leases held for investment	17,124,703		15,334,627
Less allowance for credit losses - loans and leases	Less allowance for credit losses - loans and leases	(132,805)		(102,532)		Less allowance for credit losses - loans and leases	(176,534)		(159,357)
Loans and leases, net	Loans and leases, net	14,183,400		11,657,814		Loans and leases, net	16,948,169		15,175,270
Premises and equipment, net	Premises and equipment, net	283,561		245,296		Premises and equipment, net	336,617		298,456
Bank owned life insurance	Bank owned life insurance	297,220		217,713		Bank owned life insurance	341,285		299,297

Goodwill and other intangible assets, net	Goodwill and other intangible assets, net	784,280		472,407		Goodwill and other intangible assets, net	961,244		779,248
Other assets	Other assets	433,787		338,000		Other assets	571,244		568,179
Total assets	Total assets	$	24,374,200	$	20,946,771	Total assets	$	25,871,850	$	24,008,884
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:	Liabilities:					Liabilities:
Deposits:	Deposits:					Deposits:
Noninterest-bearing demand	Noninterest-bearing demand	$	7,946,049	$	6,956,981	Noninterest-bearing demand	$	7,540,265	$	7,643,081

Interest-bearing deposits	Interest-bearing deposits	13,110,104		11,284,198		Interest-bearing deposits	14,464,409		12,233,426

Total deposits	Total deposits	21,056,153		18,241,179		Total deposits	22,004,674		19,876,507

Short-term borrowings						Short-term borrowings	7,219		158,933
Federal Home Loan Bank advances						Federal Home Loan Bank advances	30,000		550,000
Long-term debt	Long-term debt	324,230		247,360		Long-term debt	324,729		324,663

Accrued expenses and other liabilities	Accrued expenses and other liabilities	298,802		235,987		Accrued expenses and other liabilities	427,105		398,107
Total liabilities	Total liabilities	21,679,185		18,724,526		Total liabilities	22,793,727		21,308,210
Shareholders' equity:	Shareholders' equity:					Shareholders' equity:
Preferred stock, $1 par value: 10,000,000 shares authorized; 4,000 shares Series I issued and outstanding; $25,000 per share liquidation preference	Preferred stock, $1 par value: 10,000,000 shares authorized; 4,000 shares Series I issued and outstanding; $25,000 per share liquidation preference	96,422		96,422		Preferred stock, $1 par value: 10,000,000 shares authorized; 4,000 shares Series I issued and outstanding; $25,000 per share liquidation preference	96,422		96,422
Common stock, $1 par value: 200,000,000 shares authorized, 106,025,210 and 89,349,826 shares issued and outstanding, respectively		106,025		89,350
Common stock issuable: 574,139 and 595,705 shares, respectively		11,311		11,288
Common stock, $1 par value: 200,000,000 shares authorized, 115,151,566 and 106,222,758 shares issued and outstanding, respectively						Common stock, $1 par value: 200,000,000 shares authorized, 115,151,566 and 106,222,758 shares issued and outstanding, respectively	115,152		106,223
Common stock issuable: 579,835 and 607,128 shares, respectively						Common stock issuable: 579,835 and 607,128 shares, respectively	11,977		12,307
Capital surplus	Capital surplus	2,302,189		1,721,007		Capital surplus	2,606,403		2,306,366
Retained earnings	Retained earnings	354,409		330,654		Retained earnings	542,606		508,844
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(175,341)		(26,476)		Accumulated other comprehensive loss	(294,437)		(329,488)
Total shareholders' equity	Total shareholders' equity	2,695,015		2,222,245		Total shareholders' equity	3,078,123		2,700,674
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	24,374,200	$	20,946,771	Total liabilities and shareholders' equity	$	25,871,850	$	24,008,884

See accompanying notes to consolidated financial statements (unaudited).


UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)

Three Months Ended
March 31,
2022 2021
Interest revenue:
Loans, including fees $ 146,741 $ 125,726
Investment securities, including tax exempt of $2,655 and $2,150, respectively 23,665 15,448
Deposits in banks and short-term investments 653 368
Total interest revenue 171,059 141,542
Interest expense:
Deposits 3,131 5,219
Short-term borrowings — 2
Long-term debt 4,136 4,257
Total interest expense 7,267 9,478
Net interest revenue 163,792 132,064
Provision for (release of) credit losses 23,086 (12,281)
Net interest revenue after provision for credit losses 140,706 144,345
Noninterest income:
Service charges and fees 9,070 7,570
Mortgage loan gains and other related fees 16,152 22,572
Wealth management fees 5,895 3,505
Gains from sales of other loans, net 3,198 1,030
Lending and loan servicing fees 2,986 2,160
Securities losses, net (3,734) —
Other 5,406 7,868
Total noninterest income 38,973 44,705
Total revenue 179,679 189,050
Noninterest expenses:
Salaries and employee benefits 71,006 60,585
Communications and equipment 9,248 7,203
Occupancy 9,378 6,956
Advertising and public relations 1,488 1,199
Postage, printing and supplies 2,119 1,822
Professional fees 4,447 4,234
Lending and loan servicing expense 2,366 2,877
Outside services - electronic banking 2,523 2,218
FDIC assessments and other regulatory charges 2,173 1,896
Amortization of intangibles 1,793 985
Merger-related and other charges 9,016 1,543
Other 3,718 3,676
Total noninterest expenses 119,275 95,194
Income before income taxes 60,404 93,856
Income tax expense 12,385 20,150
Net income $ 48,019 $ 73,706
Net income available to common shareholders $ 46,062 $ 71,525
Net income per common share:
Basic $ 0.43 $ 0.82
Diluted 0.43 0.82
Weighted average common shares outstanding:
Basic 106,550 87,322
Diluted 106,677 87,466


	Three Months Ended March 31,
		2023		2022

Interest revenue:
Loans, including fees		$	236,431	$	146,741
Investment securities, including tax exempt of $2,110 and $2,655, respectively		39,986		23,665
Deposits in banks and short-term investments		3,070		653
Total interest revenue		279,487		171,059

Interest expense:






Deposits		57,861		3,131
Short-term borrowings		1,148		—
Federal Home Loan Bank advances		5,112		—
Long-term debt		3,896		4,136
Total interest expense		68,017		7,267
Net interest revenue		211,470		163,792
Provision for credit losses		21,783		23,086
Net interest revenue after provision for credit losses		189,687		140,706

Noninterest income:
Service charges and fees		8,699		9,070
Mortgage loan gains and other related fees		4,521		16,152
Wealth management fees		5,724		5,895
Gains from sales of other loans, net		1,916		3,198
Lending and loan servicing fees		4,016		2,986
Securities losses, net		(1,644)		(3,734)
Other		6,977		5,406
Total noninterest income		30,209		38,973
Total revenue		219,896		179,679

Noninterest expenses:
Salaries and employee benefits		78,698		71,006
Communications and equipment		10,008		9,248
Occupancy		9,889		9,378
Advertising and public relations		2,349		1,488
Postage, printing and supplies		2,537		2,119
Professional fees		6,072		4,447
Lending and loan servicing expense		2,319		2,366
Outside services - electronic banking		3,425		2,523
FDIC assessments and other regulatory charges		4,001		2,173
Amortization of intangibles		3,528		1,793
Merger-related and other charges		8,631		9,016
Other		8,348		3,718
Total noninterest expenses		139,805		119,275
Income before income taxes		80,091		60,404
Income tax expense		17,791		12,385
Net income		$	62,300	$	48,019

Net income available to common shareholders		$	60,242	$	46,062

Net income per common share:
Basic		$	0.52	$	0.43
Diluted		0.52		0.43
Weighted average common shares outstanding:
Basic		115,451		106,550
Diluted		115,715		106,677

See accompanying notes to consolidated financial statements (unaudited).


UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(in thousands)


		Three Months Ended March 31,							Three Months Ended March 31,
											Before-tax Amount		Tax (Expense) Benefit		Net of Tax Amount
2023										2023
Net income										Net income	$	80,091	$	(17,791)	$	62,300
Other comprehensive income:										Other comprehensive income:
Unrealized gains on available-for-sale securities:										Unrealized gains on available-for-sale securities:
Unrealized holding gains										Unrealized holding gains	43,279		(10,284)		32,995

Reclassification adjustment for losses included in net income										Reclassification adjustment for losses included in net income	1,644		(374)		1,270
Net unrealized gains										Net unrealized gains	44,923		(10,658)		34,265

Amortization of unrealized losses on held-to-maturity securities transferred from available-for-sale										Amortization of unrealized losses on held-to-maturity securities transferred from available-for-sale	2,968		(720)		2,248

Derivative instruments designated as cash flow hedges:										Derivative instruments designated as cash flow hedges:
Unrealized holding losses on derivatives										Unrealized holding losses on derivatives	(1,202)		307		(895)
Gains on derivative instruments realized in net income										Gains on derivative instruments realized in net income	(822)		210		(612)
Net cash flow hedge activity										Net cash flow hedge activity	(2,024)		517		(1,507)

Amortization of defined benefit pension plan net periodic pension cost components										Amortization of defined benefit pension plan net periodic pension cost components	61		(16)		45

Total other comprehensive income										Total other comprehensive income	45,928		(10,877)		35,051
Comprehensive income										Comprehensive income	$	126,019	$	(28,668)	$	97,351
			Before-tax Amount		Tax (Expense) Benefit		Net of Tax Amount
2022	2022									2022
Net income	Net income		$	60,404	$	(12,385)	$	48,019		Net income	$	60,404	$	(12,385)	$	48,019
Other comprehensive loss:	Other comprehensive loss:									Other comprehensive loss:
Unrealized losses on available-for-sale securities:	Unrealized losses on available-for-sale securities:									Unrealized losses on available-for-sale securities:
Unrealized holding losses	Unrealized holding losses		(203,885)		47,973		(155,912)			Unrealized holding losses	(203,885)		47,973		(155,912)
Reclassification of securities from available-for-sale to held-to-maturity	Reclassification of securities from available-for-sale to held-to-maturity		57,403		(13,592)		43,811			Reclassification of securities from available-for-sale to held-to-maturity	57,403		(13,592)		43,811
Reclassification adjustment for losses included in net income	Reclassification adjustment for losses included in net income		3,734		(990)		2,744			Reclassification adjustment for losses included in net income	3,734		(990)		2,744
Net unrealized losses	Net unrealized losses		(142,748)		33,391		(109,357)			Net unrealized losses	(142,748)		33,391		(109,357)
Reclassification of securities from available-for-sale to held-to-maturity	Reclassification of securities from available-for-sale to held-to-maturity		(57,403)		13,592		(43,811)			Reclassification of securities from available-for-sale to held-to-maturity	(57,403)		13,592		(43,811)

Derivative instruments designated as cash flow hedges:	Derivative instruments designated as cash flow hedges:									Derivative instruments designated as cash flow hedges:
Unrealized holding gains on derivatives	Unrealized holding gains on derivatives		5,468		(1,397)		4,071			Unrealized holding gains on derivatives	5,468		(1,397)		4,071
Reclassification of losses on derivative instruments realized in net income			141		(36)		105
Losses on derivative instruments realized in net income										Losses on derivative instruments realized in net income	141		(36)		105
Net cash flow hedge activity	Net cash flow hedge activity		5,609		(1,433)		4,176			Net cash flow hedge activity	5,609		(1,433)		4,176

Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan			170		(43)		127
Amortization of defined benefit pension plan net periodic pension cost components										Amortization of defined benefit pension plan net periodic pension cost components	170		(43)		127

Total other comprehensive loss	Total other comprehensive loss		(194,372)		45,507		(148,865)			Total other comprehensive loss	(194,372)		45,507		(148,865)
Comprehensive loss	Comprehensive loss		$	(133,968)	$	33,122	$	(100,846)		Comprehensive loss	$	(133,968)	$	33,122	$	(100,846)

2021
Net income			$	93,856	$	(20,150)	$	73,706
Other comprehensive loss:

Unrealized losses on available-for-sale securities			(50,235)		12,550		(37,685)

Derivative instruments designated as cash flow hedges:
Unrealized holding gains on derivatives			5,783		(1,477)		4,306
Reclassification of losses on derivative instruments realized in net income			144		(37)		107
Net cash flow hedge activity			5,927		(1,514)		4,413

Amortization of prior service cost and actuarial losses included in net periodic pension cost for defined benefit pension plan			261		(67)		194

Total other comprehensive loss			(44,047)		10,969		(33,078)
Comprehensive income			$	49,809	$	(9,181)	$	40,628

See accompanying notes to consolidated financial statements (unaudited).


UNITED COMMUNITY BANKS, INC.
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
(in thousands except share data)


		Shares of Common Stock	Preferred Stock		Common Stock		Common Stock Issuable		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total			Shares of Common Stock	Preferred Stock		Common Stock		Common Stock Issuable		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total

December 31, 2022																	December 31, 2022	106,222,758	96,422		106,223		12,307		2,306,366		508,844		(329,488)		2,700,674
Net income																	Net income										62,300				62,300
Other comprehensive income																	Other comprehensive income												35,051		35,051

Impact of acquisitions																	Impact of acquisitions	8,770,531			8,771				297,690						306,461

Preferred stock dividends																	Preferred stock dividends										(1,719)				(1,719)
Common stock dividends ($0.23 per share)																	Common stock dividends ($0.23 per share)										(26,819)				(26,819)
Impact of equity-based compensation awards																	Impact of equity-based compensation awards	121,888			122		498		1,900						2,520
Impact of other United sponsored equity plans																	Impact of other United sponsored equity plans	36,389			36		(828)		447						(345)

March 31, 2023																	March 31, 2023	115,151,566	$	96,422	$	115,152	$	11,977	$	2,606,403	$	542,606	$	(294,437)	$	3,078,123

December 31, 2021	December 31, 2021	89,349,826	96,422		89,350		11,288		1,721,007		330,654		(26,476)		2,222,245		December 31, 2021	89,349,826	96,422		89,350		11,288		1,721,007		330,654		(26,476)		2,222,245
Net income	Net income										48,019				48,019		Net income										48,019				48,019
Other comprehensive loss	Other comprehensive loss												(148,865)		(148,865)		Other comprehensive loss												(148,865)		(148,865)

Impact of acquisitions	Impact of acquisitions	16,571,545			16,571				579,805						596,376		Impact of acquisitions	16,571,545			16,571				579,805						596,376

Preferred stock dividends	Preferred stock dividends										(1,719)				(1,719)		Preferred stock dividends										(1,719)				(1,719)
Common stock dividends ($0.21 per share)	Common stock dividends ($0.21 per share)										(22,545)				(22,545)		Common stock dividends ($0.21 per share)										(22,545)				(22,545)
Impact of equity-based compensation awards	Impact of equity-based compensation awards	42,923			43		1,444		706						2,193		Impact of equity-based compensation awards	42,923			43		1,444		706						2,193
Impact of other United sponsored equity plans	Impact of other United sponsored equity plans	60,916			61		(1,421)		671						(689)		Impact of other United sponsored equity plans	60,916			61		(1,421)		671						(689)

March 31, 2022	March 31, 2022	106,025,210	$	96,422	$	106,025	$	11,311	$	2,302,189	$	354,409	$	(175,341)	$	2,695,015	March 31, 2022	106,025,210	$	96,422	$	106,025	$	11,311	$	2,302,189	$	354,409	$	(175,341)	$	2,695,015

December 31, 2020		86,675,279	96,422		86,675		10,855		1,638,999		136,869		37,710		2,007,530
Net income											73,706				73,706
Other comprehensive loss													(33,078)		(33,078)

Preferred stock dividends											(1,719)				(1,719)
Common stock dividends ($0.19 per share)											(16,671)				(16,671)
Impact of equity-based compensation awards		35,170			36		576		404						1,016
Impact of other United sponsored equity plans		66,059			66		(946)		1,180						300

March 31, 2021		86,776,508	$	96,422	$	86,777	$	10,485	$	1,640,583	$	192,185	$	4,632	$	2,031,084

See accompanying notes to consolidated financial statements (unaudited).


UNITED COMMUNITY BANKS, INC.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	48,019	$	73,706	Net income	$	62,300	$	48,019
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion, net	Depreciation, amortization and accretion, net	11,446		(681)		Depreciation, amortization and accretion, net	12,126		11,446
Provision for (release of) credit losses		23,086		(12,281)
Provision for credit losses						Provision for credit losses	21,783		23,086
Stock based compensation	Stock based compensation	2,488		1,507		Stock based compensation	2,482		2,488
Deferred income tax expense	Deferred income tax expense	2,309		9,172		Deferred income tax expense	8,103		2,309
Securities losses, net	Securities losses, net	3,734		—		Securities losses, net	1,644		3,734
Gains from sales of other loans, net		(3,198)		(1,030)
Gains from sales of other loans						Gains from sales of other loans	(1,916)		(3,198)

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Other assets	Other assets	18,242		15,165		Other assets	10,303		18,242
Accrued expenses and other liabilities	Accrued expenses and other liabilities	9,026		8,652		Accrued expenses and other liabilities	(22,029)		9,026
Loans held for sale	Loans held for sale	85,324		(59,546)		Loans held for sale	(4,703)		85,324
Net cash provided by operating activities	Net cash provided by operating activities	200,476		34,664		Net cash provided by operating activities	90,093		200,476

Investing activities:	Investing activities:					Investing activities:
Debt securities held-to-maturity:	Debt securities held-to-maturity:					Debt securities held-to-maturity:
Proceeds from maturities and calls	Proceeds from maturities and calls	17,807		24,629		Proceeds from maturities and calls	31,550		17,807
Purchases	Purchases	(216,482)		(192,541)		Purchases	—		(216,482)
Debt securities available-for-sale:	Debt securities available-for-sale:					Debt securities available-for-sale:
Proceeds from sales	Proceeds from sales	208,409		—		Proceeds from sales	380,661		208,409
Proceeds from maturities and calls	Proceeds from maturities and calls	205,332		184,352		Proceeds from maturities and calls	83,794		205,332
Purchases	Purchases	(933,849)		(759,874)		Purchases	(25,862)		(933,849)
Net increase in loans	Net increase in loans	(218,706)		(292,603)		Net increase in loans	(345,316)		(218,706)
Equity investments, outflows	Equity investments, outflows	(12,554)		(5,753)		Equity investments, outflows	(74,323)		(12,554)
Equity investments, inflows	Equity investments, inflows	16,091		4,984		Equity investments, inflows	93,687		16,091

Proceeds from sales of premises and equipment	Proceeds from sales of premises and equipment	2,978		287		Proceeds from sales of premises and equipment	2,169		2,978
Purchases of premises and equipment	Purchases of premises and equipment	(7,314)		(2,490)		Purchases of premises and equipment	(22,602)		(7,314)
Net cash received in acquisition	Net cash received in acquisition	35,243		—		Net cash received in acquisition	57,101		35,243
Proceeds from sale of other real estate and repossessed assets	Proceeds from sale of other real estate and repossessed assets	680		1,308		Proceeds from sale of other real estate and repossessed assets	98		680

Other investing inflows	Other investing inflows	—		430		Other investing inflows	338		—
Net cash used in investing activities		(902,365)		(1,037,271)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	181,295		(902,365)

Financing activities:	Financing activities:					Financing activities:
Net increase in deposits	Net increase in deposits	311,040		761,630		Net increase in deposits	793,162		311,040
Net decrease in short-term borrowings						Net decrease in short-term borrowings	(292,732)		—

Repayment of long-term debt		—		(15,632)
Proceeds from FHLB advances	Proceeds from FHLB advances	—		5,000		Proceeds from FHLB advances	1,580,000		—
Repayment of FHLB advances	Repayment of FHLB advances	—		(5,000)		Repayment of FHLB advances	(2,195,000)		—

Proceeds from issuance of common stock for dividend reinvestment and employee benefit plans		72		248
Proceeds from exercise of stock options		274		—
Cash paid for shares withheld to cover payroll taxes related to equity instruments		(1,475)		(574)

Cash dividends on common stock	Cash dividends on common stock	(18,149)		(15,852)		Cash dividends on common stock	(23,674)		(18,149)
Cash dividends on preferred stock	Cash dividends on preferred stock	(1,719)		(1,719)		Cash dividends on preferred stock	(1,719)		(1,719)
Net cash provided by financing activities		290,043		728,101
Other financing inflows						Other financing inflows	1,058		346
Other financing outflows						Other financing outflows	(1,655)		(1,475)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(140,560)		290,043

Net change in cash and cash equivalents	Net change in cash and cash equivalents	(411,846)		(274,506)		Net change in cash and cash equivalents	130,828		(411,846)

Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	2,318,510		1,608,619		Cash and cash equivalents, beginning of period	646,853		2,318,510

Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	1,906,664	$	1,334,113	Cash and cash equivalents, end of period	$	777,681	$	1,906,664

See accompanying notes to consolidated financial statements (unaudited).

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Basis of Presentation and Updates to Significant Accounting Policies

Basis of Presentation

United’s accounting and financial reporting policies conform to GAAP and reporting guidelines of banking regulatory authorities. The accompanying interim consolidated financial statements have not been audited. All material intercompany balances and transactions have been eliminated. A more detailed description of United’s accounting policies is included in its ~~2021~~2022 10-K.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments are normal and recurring accruals considered necessary for a fair and accurate presentation. The results for interim periods are not necessarily indicative of results for the full year or any other interim periods. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in United’s ~~2021~~2022 10-K.

Updates to Significant Accounting Policies

Effective January 1, 2023, United adopted ASU 2022-02, which updated the guidance on modifications to financing receivables by effectively replacing the concept of troubled debt restructurings with a new concept, loan modifications to borrowers experiencing financial difficulty. See Note 2 for further detail. Below summarizes the policy surrounding FDMs.

FDMs: A loan for which the terms have been modified as a result of the borrower experiencing financial difficulty is generally considered to be a FDM. Modified terms that result in a FDM include one or a combination of the following: a reduction of the stated interest rate of the loan, an extension of the term or amortization period, a more than insignificant payment delay or principal forgiveness. The ACL on FDMs is calculated using the same method as other loans held for investment.

Note 2 – Accounting Standards Updates and Recently Adopted Standards

Recently Adopted Standards

In ~~July~~October 2021, the FASB issued ASU No. ~~2021-05,~~2021-08, ~~Leases~~Business Combinations (Topic ~~842)~~805): ~~Lessors - Certain Leases~~Accounting for Contract Assets and Contract Liabilities from contracts with ~~Variable Lease Payments~~Customers. The update ~~amends~~requires that an acquiring entity apply the ~~lease classification requirements for lessors~~guidance from Revenue from Contracts with Customers (Topic 606) to ~~align them with practice under the former lease accounting standard. Specifically, lessors should classify~~recognize and measure contract assets and contract liabilities in a ~~lease with variable lease payments that do not depend on a reference index or rate as an operating lease if certain criteria are met. United adopted~~business combination, rather than fair value. Adoption of this update as of January 1, ~~2022, with no~~2023 did not have a material impact on the consolidated financial statements.

~~Recently Issued Standards~~

In March 2022, the FASB issued ASU No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. The update expands the current last-of-layer method to a portfolio layer method which allows multiple hedged layers of a single closed portfolio and non-prepayable financial assets. In addition, the update specifies that eligible hedging instruments may include spot-starting or forward-starting swaps and that the number of hedged layers corresponds with the number of hedges designated. Finally, the update provides additional guidance on the accounting for and disclosure of hedge basis adjustments. ~~For public entities,~~Adoption of this ~~guidance is effective for fiscal years beginning after December 15, 2022. United does~~update as of January 1, 2023 did not ~~expect the new guidance to~~ have a material impact on the consolidated financial statements.

In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The update eliminates the previous accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings when a borrower is experiencing financial difficulty. The update also requires that an entity disclose current-period gross charge-offs by year of origination. United adopted this update using a modified retrospective transition method as of January 1, 2023. The quantitative impact of adoption related to the CECL calculation for FDMs was not material; thus, no corresponding cumulative effect adjustment to retained earnings was recorded.

Recently Issued Standards

In March 2022, the FASB issued ASU No 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The update broadens the application of the proportional amortization method to tax equity investments other than LIHTC, providing certain conditions are met. The election to apply the proportional amortization method must be made on a tax-credit-program by tax-credit-program basis rather than at the reporting entity level or to individual investments. The update also requires certain disclosures related to those investments for which the proportional amortization method has been applied. For public entities, this guidance is effective for fiscal years beginning after December 15, ~~2022.~~2023. United does not expect the new guidance to have a material impact on the consolidated financial statements.

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 3 – Supplemental Cash Flow Information

The supplemental schedule of significant non-cash investing and financing activities for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 is as follows (in thousands).


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022

Significant non-cash investing and financing transactions:	Significant non-cash investing and financing transactions:					Significant non-cash investing and financing transactions:

Commitments to fund equity investments						Commitments to fund equity investments	$	20,000	$	—

Transfers of AFS securities to HTM securities	Transfers of AFS securities to HTM securities	$	1,105,194	$	—	Transfers of AFS securities to HTM securities	—		1,105,194
Right-of-use assets obtained in exchange for lease liabilities		2,756		381

Acquisitions:	Acquisitions:					Acquisitions:
Assets acquired	Assets acquired	3,254,173		—		Assets acquired	1,903,930		3,254,173
Liabilities assumed	Liabilities assumed	2,657,173		—		Liabilities assumed	1,597,022		2,657,173
Net assets acquired	Net assets acquired	597,000		—		Net assets acquired	306,908		597,000
Common stock issued and options converted	Common stock issued and options converted	596,376		—		Common stock issued and options converted	306,461		596,376

1011

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 4 – Acquisitions

Acquisition of ~~Reliant~~Progress

On January ~~1, 2022,~~3, 2023, United acquired all of the outstanding common stock of ~~Reliant~~Progress in a stock transaction. ~~Reliant was headquartered~~Progress operated 13 offices primarily located in ~~Brentwood, Tennessee, a suburb of Nashville, Tennessee,~~Alabama and ~~operated a 25-branch network in Tennessee.~~the Florida Panhandle, which facilitated United’s growth into those markets. United’s operating results for the three months ended March 31, ~~2022~~2023 include the operating results of the acquired business for the period subsequent to the acquisition date of January ~~1, 2022.~~3, 2023.

The purchased assets and assumed liabilities were recorded at their acquisition date fair values and are summarized in the table below (dollars in thousands).

~~Reliant~~Progress

Fair Value Recorded by United (1)

January ~~1, 2022~~3, 2023

Assets

Cash and cash equivalents

~~62,867~~57,548

Debt securities

~~249,107~~111,006

Loans held for sale

~~116,406~~2,087

Loans held for investment

~~2,320,737~~1,442,959

Premises and equipment

21,118

Bank-owned life insurance

40,723

~~Premises and equipment~~

~~35,631~~

~~Bank-owned life insurance~~

~~78,170~~

~~Accrued interest receivable~~

~~12,027~~

~~Net deferred tax asset~~

~~5,793~~

Core deposit intangible

~~14,500~~39,980

Other assets

~~59,768~~42,965

Total assets acquired

~~2,955,006~~1,758,386

Liabilities

Deposits

~~2,504,823~~1,334,476

Short-term borrowings

~~27,000~~141,017

~~Long-term debt~~Federal Home Loan Bank advances

~~76,730~~95,000

Other liabilities

~~48,620~~26,529

Total liabilities assumed

~~2,657,173~~1,597,022

Total identifiable net assets

~~297,833~~161,364

Consideration transferred

Cash

~~624~~447

Common stock issued ~~(16,571,545~~(8,770,531 shares)

~~595,581~~296,444

Options converted

~~795~~10,017

Total fair value of consideration transferred

~~597,000~~306,908

Goodwill

~~299,167~~145,544

(1) Fair values are preliminary and are subject to refinement for a period not to exceed one year after the closing date of an acquisition as information relative to closing date fair values becomes available.

Goodwill represents the intangible value of ~~Reliant’s~~Progress’ business and reputation within the markets it served and is not expected to be deductible for income tax purposes. The ~~Reliant~~Progress core deposit intangible will be amortized over its expected useful life of 10 years using the sum-of-the-years-digits method.

1112

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

The following table presents additional information related to the acquired ~~Reliant~~Progress loan portfolio at the acquisition date (in thousands).


	January ~~1, 2022~~3, 2023
PCD loans:
Par value	$	~~258,462~~64,913
ACL at acquisition	~~(12,737)~~(2,704)
Non-credit discount	~~(3,294)~~(150)
Purchase price	$	~~242,431~~62,059

Non-PCD loans:
Fair value	$	~~2,078,306~~1,380,900
Gross contractual amounts receivable	~~2,355,205~~1,626,243
Estimate of contractual cash flows not expected to be collected	~~25,990~~9,287

Pro forma information

The following table discloses the impact of the ~~Reliant~~Progress acquisition since ~~acquisition~~the date ~~through March 31 in the year~~ of acquisition. The table also presents certain pro forma information as if Progress had been acquired on January 1, 2022 and Reliant had been acquired on January 1, 2021. These results combine the historical results of the acquired entity with United’s consolidated statement of income. Adjustments were made for the estimated impact of certain fair value adjustments and other acquisition-related activity; however pro forma financial results presented are not necessarily indicative of what would have occurred had the acquisition taken place in earlier years.

Merger-related costs from the Progress acquisition of $7.49 million have been excluded from the three months ended March 31, 2023 pro forma information presented below and included in the three months ended March 31, 2022 pro forma information presented below. Merger-related costs from the Reliant acquisition of $8.54 million have been excluded from the three months ended March 31, 2022 ~~pro forma information presented below and included in the three months ended March 31, 2021~~ pro forma information presented below. The actual results and pro forma information were as follows (in thousands):

Three Months Ended
March 31,
Revenue Net Income
2022
Actual Reliant results included in statement of income since acquisition date $ 13,914 $ 598
Supplemental consolidated pro forma as if Reliant had been acquired January 1, 2021 196,238 66,759
2021
Supplemental consolidated pro forma as if Reliant had been acquired January 1, 2021 $ 210,141 $ 67,011


	Three Months Ended March 31,
		Revenue		Net Income
2023
Actual Progress results included in statement of income since acquisition date		$	6,652	$	1,810
Supplemental consolidated pro forma as if Progress had been acquired January 1, 2022		229,541		75,209

2022
Actual Reliant results included in statement of income since acquisition date		$	13,914	$	598
Supplemental consolidated pro forma as if Progress had been acquired January 1, 2022 and Reliant had been acquired January 1, 2021		$	204,869	$	57,382

1213

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 5 – Investment Securities

During the first quarter of 2022, United transferred $1.11 billion of AFS debt securities to HTM. As of the transfer date, these securities had $57.4 million of unrealized losses, which are recorded in AOCI. These transfer-date unrealized losses will be reclassified out of AOCI as a yield adjustment and reduce earnings over the remaining life of the security.

The amortized cost basis, unrealized gains and losses and fair value of HTM debt securities as of the dates indicated are as follows (in thousands).

Amortized
Cost Gross Unrealized
Gains Gross Unrealized
Losses Fair
Value
As of March 31, 2022
U.S. Treasuries $ 19,811 $ — $ 1,166 $ 18,645
U.S. Government agencies & GSEs 82,475 — 6,792 75,683
State and political subdivisions 297,630 740 33,322 265,048
Residential MBS, Agency & GSEs 1,408,767 324 61,902 1,347,189
Commercial MBS, Agency & GSEs 677,300 3 46,115 631,188
Supranational entities 15,000 — 880 14,120
Total $ 2,500,983 $ 1,067 $ 150,177 $ 2,351,873
As of December 31, 2021
U.S. Treasuries $ 19,803 $ 20 $ — $ 19,823
U.S. Government agencies & GSEs 70,180 — 1,121 69,059
State and political subdivisions 257,688 4,341 4,080 257,949
Residential MBS, Agency & GSEs 381,641 2,021 3,687 379,975
Commercial MBS, Agency & GSEs 411,786 4,106 8,915 406,977
Supranational entities $ 15,000 $ 21 $ — $ 15,021
Total $ 1,156,098 $ 10,509 $ 17,803 $ 1,148,804

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
As of March 31, 2023
U.S. Treasuries	$	19,841	$	—	$	2,024	$	17,817
U.S. Government agencies & GSEs	99,718		—		15,696		84,022
State and political subdivisions	295,453		274		53,897		241,830
Residential MBS, Agency & GSEs	1,465,433		36		198,072		1,267,397

Commercial MBS, Agency & GSEs	688,636		—		105,665		582,971

Supranational entities	15,000		—		2,163		12,837
Total	$	2,584,081	$	310	$	377,517	$	2,206,874

As of December 31, 2022
U.S. Treasuries	$	19,834	$	—	$	2,417	$	17,417
U.S. Government agencies & GSEs	99,679		—		18,169		81,510
State and political subdivisions	295,945		56		64,340		231,661
Residential MBS, Agency & GSEs	1,488,028		35		223,566		1,264,497

Commercial MBS, Agency & GSEs	695,162		—		111,586		583,576

Supranational entities	$	15,000	$	—	$	2,588	$	12,412
Total	$	2,613,648	$	91	$	422,666	$	2,191,073

The amortized cost basis, unrealized gains and losses, and fair value of AFS debt securities as of the dates indicated are presented below (in thousands).


		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
As of March 31, 2022
As of March 31, 2023										As of March 31, 2023
U.S. Treasuries	U.S. Treasuries	$	194,455	$	217	$	8,362	$	186,310	U.S. Treasuries	$	188,580	$	51	$	12,372	$	176,259
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	221,473		502		10,496		211,479		U.S. Government agencies & GSEs	260,447		371		15,175		245,643
State and political subdivisions	State and political subdivisions	346,723		2,890		14,569		335,044		State and political subdivisions	183,908		—		20,955		162,953
Residential MBS, Agency & GSEs	Residential MBS, Agency & GSEs	1,545,430		959		73,555		1,472,834		Residential MBS, Agency & GSEs	1,483,641		9		138,784		1,344,866
Residential MBS, Non-agency	Residential MBS, Non-agency	273,119		139		3,563		269,695		Residential MBS, Non-agency	368,028		—		26,272		341,756
Commercial MBS, Agency & GSEs	Commercial MBS, Agency & GSEs	734,692		276		40,698		694,270		Commercial MBS, Agency & GSEs	691,880		—		71,720		620,160
Commercial MBS, Non-agency	Commercial MBS, Non-agency	31,707		271		94		31,884		Commercial MBS, Non-agency	31,452		—		924		30,528
Corporate bonds	Corporate bonds	240,533		274		12,252		228,555		Corporate bonds	219,692		37		19,662		200,067
Asset-backed securities	Asset-backed securities	483,434		595		4,986		479,043		Asset-backed securities	215,580		—		6,673		208,907
Total	Total	$	4,071,566	$	6,123	$	168,575	$	3,909,114	Total	$	3,643,208	$	468	$	312,537	$	3,331,139

As of December 31, 2021
As of December 31, 2022										As of December 31, 2022
U.S. Treasuries	U.S. Treasuries	$	218,027	$	1,661	$	2,168	$	217,520	U.S. Treasuries	$	163,972	$	—	$	14,620	$	149,352
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	189,855		605		3,428		187,032		U.S. Government agencies & GSEs	266,347		463		16,694		250,116
State and political subdivisions	State and political subdivisions	263,269		15,237		2,662		275,844		State and political subdivisions	329,723		151		26,126		303,748
Residential MBS, Agency & GSEs	Residential MBS, Agency & GSEs	2,079,700		9,785		28,521		2,060,964		Residential MBS, Agency & GSEs	1,609,442		13		160,636		1,448,819
Residential MBS, Non-agency	Residential MBS, Non-agency	81,925		2,249		4		84,170		Residential MBS, Non-agency	374,535		—		27,873		346,662
Commercial MBS, Agency & GSEs	Commercial MBS, Agency & GSEs	870,563		2,974		16,156		857,381		Commercial MBS, Agency & GSEs	720,282		471		79,407		641,346
Commercial MBS, Non-agency	Commercial MBS, Non-agency	15,202		1,268		—		16,470		Commercial MBS, Non-agency	31,624		—		1,058		30,566
Corporate bonds	Corporate bonds	194,164		814		1,812		193,166		Corporate bonds	236,181		34		23,763		212,452
Asset-backed securities	Asset-backed securities	603,824		2,000		1,547		604,277		Asset-backed securities	239,220		—		7,948		231,272
Total	Total	$	4,516,529	$	36,593	$	56,298	$	4,496,824	Total	$	3,971,326	$	1,132	$	358,125	$	3,614,333

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Securities with a carrying value of ~~$1.77~~$4.39 billion and ~~$1.46~~$2.53 billion were pledged, primarily to secure public deposits and provide contingent liquidity through the Bank Term Funding Program at the Federal Reserve Bank, at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The following table summarizes HTM debt securities in an unrealized loss position as of the dates indicated (in thousands).


		Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
As of March 31, 2022
As of March 31, 2023														As of March 31, 2023
U.S. Treasuries	U.S. Treasuries	$	18,645	$	1,166	$	—	$	—	$	18,645	$	1,166	U.S. Treasuries	$	—	$	—	$	17,817	$	2,024	$	17,817	$	2,024
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	66,566		5,538		9,117		1,254		75,683		6,792		U.S. Government agencies & GSEs	—		—		84,022		15,696		84,022		15,696
State and political subdivisions	State and political subdivisions	207,559		27,465		29,522		5,857		237,081		33,322		State and political subdivisions	11,082		98		213,432		53,799		224,514		53,897
Residential MBS, Agency & GSEs	Residential MBS, Agency & GSEs	1,164,029		53,415		173,097		8,487		1,337,126		61,902		Residential MBS, Agency & GSEs	59,315		2,458		1,206,039		195,614		1,265,354		198,072

Commercial MBS, Agency & GSEs	Commercial MBS, Agency & GSEs	531,665		37,366		97,882		8,749		629,547		46,115		Commercial MBS, Agency & GSEs	40,149		3,937		542,821		101,728		582,970		105,665

Supranational entities	Supranational entities	14,120		880		—		—		14,120		880		Supranational entities	—		—		12,837		2,163		12,837		2,163
Total unrealized loss position	Total unrealized loss position	$	2,002,584	$	125,830	$	309,618	$	24,347	$	2,312,202	$	150,177	Total unrealized loss position	$	110,546	$	6,493	$	2,076,968	$	371,024	$	2,187,514	$	377,517

As of December 31, 2021
As of December 31, 2022														As of December 31, 2022
U.S. Treasuries														U.S. Treasuries	$	17,417	$	2,417	$	—	$	—	$	17,417	$	2,417
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	$	64,658	$	888	$	4,401	$	233	$	69,059	$	1,121	U.S. Government agencies & GSEs	$	10,687	$	1,813	$	70,823	$	16,356	$	81,510	$	18,169
State and political subdivisions	State and political subdivisions	131,128		3,590		9,006		490		140,134		4,080		State and political subdivisions	104,243		20,639		117,115		43,701		221,358		64,340
Residential MBS, Agency & GSEs	Residential MBS, Agency & GSEs	289,132		3,687		—		—		289,132		3,687		Residential MBS, Agency & GSEs	296,673		38,289		965,785		185,277		1,262,458		223,566

Commercial MBS, Agency & GSEs	Commercial MBS, Agency & GSEs	314,049		8,540		10,384		375		324,433		8,915		Commercial MBS, Agency & GSEs	176,848		24,497		406,728		87,089		583,576		111,586

Supranational entities														Supranational entities	$	12,412	$	2,588	$	—	$	—	$	12,412	$	2,588
Total unrealized loss position	Total unrealized loss position	$	798,967	$	16,705	$	23,791	$	1,098	$	822,758	$	17,803	Total unrealized loss position	$	618,280	$	90,243	$	1,560,451	$	332,423	$	2,178,731	$	422,666

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

The following table summarizes AFS debt securities in an unrealized loss position as of the dates indicated (in thousands).


		Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
As of March 31, 2022
As of March 31, 2023														As of March 31, 2023
U.S. Treasuries	U.S. Treasuries	$	106,713	$	8,362	$	—	$	—	$	106,713	$	8,362	U.S. Treasuries	$	49,418	$	429	$	102,350	$	11,943	$	151,768	$	12,372
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	92,202		3,216		62,571		7,280		154,773		10,496		U.S. Government agencies & GSEs	76,626		476		121,539		14,699		198,165		15,175
State and political subdivisions	State and political subdivisions	132,721		10,172		31,963		4,397		164,684		14,569		State and political subdivisions	7,856		350		155,098		20,605		162,954		20,955
Residential MBS, Agency & GSEs	Residential MBS, Agency & GSEs	1,131,348		53,514		207,905		20,041		1,339,253		73,555		Residential MBS, Agency & GSEs	368,872		16,135		970,538		122,649		1,339,410		138,784
Residential MBS, Non-agency	Residential MBS, Non-agency	213,545		3,563		—		—		213,545		3,563		Residential MBS, Non-agency	160,894		10,277		180,862		15,995		341,756		26,272
Commercial MBS, Agency & GSEs	Commercial MBS, Agency & GSEs	325,242		10,140		267,697		30,558		592,939		40,698		Commercial MBS, Agency & GSEs	160,918		4,592		459,242		67,128		620,160		71,720
Commercial MBS, Non-agency	Commercial MBS, Non-agency	16,420		94		—		—		16,420		94		Commercial MBS, Non-agency	14,514		634		16,015		290		30,529		924
Corporate bonds	Corporate bonds	197,753		11,757		5,705		495		203,458		12,252		Corporate bonds	9,344		528		187,129		19,134		196,473		19,662
Asset-backed securities	Asset-backed securities	223,161		3,573		44,718		1,413		267,879		4,986		Asset-backed securities	43,909		497		164,997		6,176		208,906		6,673
Total unrealized loss position	Total unrealized loss position	$	2,439,105	$	104,391	$	620,559	$	64,184	$	3,059,664	$	168,575	Total unrealized loss position	$	892,351	$	33,918	$	2,357,770	$	278,619	$	3,250,121	$	312,537

As of December 31, 2021
As of December 31, 2022														As of December 31, 2022
U.S. Treasuries	U.S. Treasuries	$	111,606	$	2,168	$	—	$	—	$	111,606	$	2,168	U.S. Treasuries	$	49,259	$	724	$	100,093	$	13,896	$	149,352	$	14,620
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	132,893		2,591		20,093		837		152,986		3,428		U.S. Government agencies & GSEs	93,015		2,124		108,093		14,570		201,108		16,694
State and political subdivisions	State and political subdivisions	69,302		2,581		3,148		81		72,450		2,662		State and political subdivisions	207,749		9,906		62,606		16,220		270,355		26,126
Residential MBS, Agency & GSEs	Residential MBS, Agency & GSEs	1,534,744		25,799		74,481		2,722		1,609,225		28,521		Residential MBS, Agency & GSEs	1,049,648		102,852		392,288		57,784		1,441,936		160,636
Residential MBS, Non-agency	Residential MBS, Non-agency	12,608		4		—		—		12,608		4		Residential MBS, Non-agency	338,399		27,095		8,263		778		346,662		27,873
Commercial MBS, Agency & GSEs	Commercial MBS, Agency & GSEs	582,235		13,098		66,014		3,058		648,249		16,156		Commercial MBS, Agency & GSEs	288,787		17,304		332,088		62,103		620,875		79,407

Commercial MBS, Non-agency														Commercial MBS, Non-agency	30,566		1,058		—		—		30,566		1,058
Corporate bonds	Corporate bonds	149,246		1,811		16		1		149,262		1,812		Corporate bonds	83,010		7,776		127,603		15,987		210,613		23,763
Asset-backed securities	Asset-backed securities	195,164		1,546		571		1		195,735		1,547		Asset-backed securities	97,705		2,664		133,567		5,284		231,272		7,948
Total unrealized loss position	Total unrealized loss position	$	2,787,798	$	49,598	$	164,323	$	6,700	$	2,952,121	$	56,298	Total unrealized loss position	$	2,238,138	$	171,503	$	1,264,601	$	186,622	$	3,502,739	$	358,125

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

At March 31, ~~2022,~~2023, there were ~~629~~682 AFS debt securities and ~~267~~312 HTM debt securities that were in an unrealized loss position. United does not intend to sell nor does it believe it will be required to sell securities in an unrealized loss position prior to the recovery of their amortized cost basis. Unrealized losses at March 31, ~~2022~~2023 were primarily attributable to changes in interest rates.

At March 31, ~~2022~~2023 and December 31, ~~2021, calculated~~2022, estimated credit losses and, thus, the related ACL on HTM debt securities were 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 was recorded on the HTM portfolio at March 31, ~~2022~~2023 or December 31, ~~2021.~~2022. In addition, based on the assessments performed at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there was no ACL required related to the AFS portfolio.

The following table presents accrued interest receivable for the periods indicated on HTM and AFS debt securities (in thousands), which was excluded from the estimate of credit losses.

Accrued Interest Receivable
March 31, 2022 December 31, 2021
HTM $ 5,826 $ 3,596
AFS 10,378 9,868

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~


	Accrued Interest Receivable
	March 31, 2023		December 31, 2022
HTM	$	5,918	$	7,234
AFS	11,136		15,281

The amortized cost and fair value of AFS and HTM debt securities at March 31, ~~2022,~~2023, by contractual maturity, are presented in the following table (in thousands). Expected maturities may differ from contractual maturities because issuers and borrowers may have the right to call or prepay obligations.


		AFS				HTM					AFS				HTM
		Amortized Cost		Fair Value		Amortized Cost		Fair Value			Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within 1 year:	Within 1 year:									Within 1 year:
U.S. Treasuries	U.S. Treasuries	$	30,988	$	31,111	$	—	$	—	U.S. Treasuries	$	74,537	$	74,153	$	—	$	—
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	402		398		—		—		U.S. Government agencies & GSEs	339		329		—		—
State and political subdivisions	State and political subdivisions	15,006		15,101		5,200		5,264		State and political subdivisions	—		—		1,200		1,195
Corporate bonds	Corporate bonds	2,879		2,866		—		—		Corporate bonds	5,192		5,006		—		—

		49,275		49,476		5,200		5,264			80,068		79,488		1,200		1,195
1 to 5 years:	1 to 5 years:									1 to 5 years:
U.S. Treasuries	U.S. Treasuries	99,782		96,257		—		—		U.S. Treasuries	99,100		88,768		19,841		17,817
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	37,964		36,097		—		—		U.S. Government agencies & GSEs	39,608		36,460		—		—
State and political subdivisions	State and political subdivisions	34,565		34,552		7,602		7,986		State and political subdivisions	16,353		15,542		28,634		26,902
Corporate bonds	Corporate bonds	135,813		129,898		—		—		Corporate bonds	153,336		140,441		—		—

		308,124		296,804		7,602		7,986			308,397		281,211		48,475		44,719
5 to 10 years:	5 to 10 years:									5 to 10 years:
U.S. Treasuries	U.S. Treasuries	63,685		58,942		19,811		18,645		U.S. Treasuries	14,943		13,338		—		—
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	75,459		69,020		31,761		29,107		U.S. Government agencies & GSEs	72,813		65,089		73,288		62,808
State and political subdivisions	State and political subdivisions	132,148		127,009		38,584		36,312		State and political subdivisions	61,364		51,670		27,810		24,931
Corporate bonds	Corporate bonds	101,054		94,907		—		—		Corporate bonds	60,365		53,795		—		—
Supranational entities	Supranational entities	—		—		15,000		14,120		Supranational entities	—		—		15,000		12,837
		372,346		349,878		105,156		98,184			209,485		183,892		116,098		100,576
More than 10 years:	More than 10 years:									More than 10 years:
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	107,648		105,964		50,714		46,576		U.S. Government agencies & GSEs	147,687		143,765		26,430		21,214
State and political subdivisions	State and political subdivisions	165,004		158,382		246,244		215,486		State and political subdivisions	106,191		95,741		237,809		188,802
Corporate bonds	Corporate bonds	787		884		—		—		Corporate bonds	799		825		—		—

		273,439		265,230		296,958		262,062			254,677		240,331		264,239		210,016
Debt securities not due at a single maturity date:	Debt securities not due at a single maturity date:									Debt securities not due at a single maturity date:
Asset-backed securities	Asset-backed securities	483,434		479,043		—		—		Asset-backed securities	215,580		208,907		—		—
Residential MBS	Residential MBS	1,818,549		1,742,529		1,408,767		1,347,189		Residential MBS	1,851,669		1,686,622		1,465,433		1,267,397
Commercial MBS	Commercial MBS	766,399		726,154		677,300		631,188		Commercial MBS	723,332		650,688		688,636		582,971
											2,790,581		2,546,217		2,154,069		1,850,368

Total	Total	$	4,071,566	$	3,909,114	$	2,500,983	$	2,351,873	Total	$	3,643,208	$	3,331,139	$	2,584,081	$	2,206,874

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Realized gains and losses are derived using the specific identification method for determining the cost of securities sold. The following table summarizes AFS securities sales activity for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (in thousands).

Three Months Ended
March 31,
2022 2021
Proceeds from sales $ 208,409 $ —
Gross realized gains $ 963 $ —
Gross realized losses (4,697) —
Securities losses, net $ (3,734) $ —
Income tax benefit attributable to sales $ (990) $ —


	Three Months Ended March 31,
		2023		2022
Proceeds from sales		$	380,661	$	208,409

Gross realized gains		$	1,373	$	963
Gross realized losses		(3,017)		(4,697)

Securities gains (losses), net		$	(1,644)	$	(3,734)

Income tax expense (benefit) attributable to sales		$	(374)	$	(990)

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

Note 6 – Loans and Leases and Allowance for Credit Losses

Major classifications of the loan and lease portfolio (collectively referred to as the “loan portfolio” or “loans”) are summarized as of the dates indicated as follows (in thousands).

March 31, 2022 December 31, 2021
Owner occupied commercial real estate $ 2,637,974 $ 2,321,685
Income producing commercial real estate 3,328,133 2,600,858
Commercial & industrial (1)
2,336,255 1,910,162
Commercial construction 1,482,518 1,014,830
Equipment financing 1,147,794 1,083,021
Total commercial 10,932,674 8,930,556
Residential mortgage 1,825,650 1,637,885
HELOC 777,739 694,034
Residential construction 368,330 359,815
Manufactured housing 269,066 —
Consumer 142,746 138,056
Total loans 14,316,205 11,760,346
Less allowance for credit losses - loans (132,805) (102,532)
Loans, net $ 14,183,400 $ 11,657,814

~~(1)~~ ~~Commercial and industrial loans as of March 31, 2022 and December 31, 2021 included $34.0 million and $88.3 million of PPP loans, respectively.~~


	March 31, 2023		December 31, 2022
Owner occupied commercial real estate	$	3,141,198	$	2,734,666
Income producing commercial real estate	3,611,376		3,261,626
Commercial & industrial	2,441,721		2,252,322
Commercial construction	1,805,995		1,597,848
Equipment financing	1,446,766		1,374,251
Total commercial	12,447,056		11,220,713
Residential mortgage	2,755,380		2,355,061
HELOC	930,097		850,269
Residential construction	492,356		442,553
Manufactured housing	326,311		316,741
Consumer	173,503		149,290


Total loans	17,124,703		15,334,627

Less allowance for credit losses - loans	(176,534)		(159,357)

Loans, net	$	16,948,169	$	15,175,270

Accrued interest receivable related to loans totaled ~~$37.4~~$56.1 million and ~~$28.5~~$52.0 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and was reported in other assets on the consolidated balance sheets. Accrued interest receivable was excluded from the estimate of credit losses.

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the loan portfolio was subject to blanket pledges on certain qualifying loan types with the FHLB and FRB to secure contingent funding sources.

The following table presents the amortized cost of loans held for investment that were sold in the periods indicated (in thousands). The gains ~~and losses~~ on these loan sales were included in noninterest income on the consolidated statements of income.

Three Months Ended March 31,
2022 2021
Guaranteed portion of SBA/USDA loans $ 28,343 $ 11,345
Equipment financing receivables 23,436 1,059
Total $ 51,779 $ 12,404


	Three Months Ended March 31,
		2023		2022
Guaranteed portion of SBA/USDA loans		$	21,770	$	28,343
Equipment financing receivables		18,703		23,436
Total		$	40,473	$	51,779

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, equipment financing ~~assets~~receivables included leases of ~~$38.1~~$54.1 million and ~~$37.7~~$46.0 million, respectively. The components of the net investment in leases, which included both sales-type and direct financing, are presented below (in thousands).

March 31, 2022 December 31, 2021
Minimum future lease payments receivable $ 40,401 $ 39,962
Estimated residual value of leased equipment 3,069 3,216
Initial direct costs 651 669
Security deposits (659) (687)
Unearned income (5,378) (5,432)
Net investment in leases $ 38,084 $ 37,728

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~


	March 31, 2023		December 31, 2022
Minimum future lease payments receivable	$	58,978	$	49,723
Estimated residual value of leased equipment	3,167		2,804
Initial direct costs	989		767
Security deposits	(408)		(429)

Unearned income	(8,596)		(6,877)
Net investment in leases	$	54,130	$	45,988

Minimum future lease payments expected to be received from equipment financing lease contracts as of March 31, ~~2022~~2023 were as follows (in thousands):

Year
Remainder of 2022 $ 12,182
2023 12,695
2024 8,162
2025 4,954
2026 2,152
Thereafter 256
Total $ 40,401


Year
Remainder of 2023	$	15,286
2024	16,672
2025	12,986
2026	8,716
2027	4,722
Thereafter	596
Total	$	58,978

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Nonaccrual and Past Due Loans ~~HFI~~

The following table presents the aging of the amortized cost basis in loans by aging category and accrual status as of the dates indicated (in thousands). Past due status is based on contractual terms of the loan. The accrual of interest is generally discontinued when a loan becomes 90 days past due.


		Accruing																				Accruing
		Current Loans			Loans Past Due																	Current Loans				Loans Past Due
				30 - 59 Days			60 - 89 Days			> 90 Days			Nonaccrual Loans			Total Loans			Current Loans							30 - 59 Days				60 - 89 Days				> 90 Days				Nonaccrual Loans				Total Loans
As of March 31, 2022
As of March 31, 2023																				As of March 31, 2023
Owner occupied commercial real estate	Owner occupied commercial real estate	$	2,632,429		$	955		$	—		$	—		$	4,590		$	2,637,974			Owner occupied commercial real estate			$	3,136,902			$	3,296			$	—			$	—			$	1,000			$	3,141,198
Income producing commercial real estate	Income producing commercial real estate	3,319,869			1,024			20			—			7,220			3,328,133			Income producing commercial real estate			3,576,513				936				23,324								10,603				3,611,376
Commercial & industrial	Commercial & industrial	2,326,976			3,052			—			—			6,227			2,336,255			Commercial & industrial			2,405,781				2,406				249				9				33,276				2,441,721
Commercial construction	Commercial construction	1,481,843			242			32			—			401			1,482,518			Commercial construction			1,804,958				525				37				—				475				1,805,995
Equipment financing	Equipment financing	1,141,335			2,844			1,075			—			2,540			1,147,794			Equipment financing			1,434,193				5,029				2,500				—				5,044				1,446,766
Total commercial	Total commercial	10,902,452			8,117			1,127			—			20,978			10,932,674			Total commercial			12,358,347				12,192				26,110				9				50,398				12,447,056
Residential mortgage	Residential mortgage	1,811,286			1,115			225			—			13,024			1,825,650			Residential mortgage			2,740,975				2,976				149				—				11,280				2,755,380
HELOC	HELOC	775,632			465			459			—			1,183			777,739			HELOC			924,436				2,871				413				—				2,377				930,097
Residential construction	Residential construction	368,089			—			29			—			212			368,330			Residential construction			492,138				75				—				—				143				492,356
Manufactured housing	Manufactured housing	265,394			652			513			—			2,507			269,066			Manufactured housing			309,871				6,221				1,677				—				8,542				326,311
Consumer	Consumer	142,463			199			42			2			40			142,746			Consumer			172,643				486				317				2				55				173,503
Total loans	Total loans	$	14,265,316		$	10,548		$	2,395		$	2		$	37,944		$	14,316,205		Total loans			$	16,998,410			$	24,821			$	28,666			$	11			$	72,795			$	17,124,703

As of December 31, 2021
As of December 31, 2022																				As of December 31, 2022
Owner occupied commercial real estate	Owner occupied commercial real estate	$	2,318,944		$	27		$	—		$	—		$	2,714		$	2,321,685		Owner occupied commercial real estate			$	2,731,574			$	1,522			$	1,047			$	—			$	523			$	2,734,666
Income producing commercial real estate	Income producing commercial real estate	2,593,124			146			—			—			7,588			2,600,858			Income producing commercial real estate			3,257,232				468				41				—				3,885				3,261,626
Commercial & industrial	Commercial & industrial	1,903,730			584			419			—			5,429			1,910,162			Commercial & industrial			2,234,284				3,288				274				6				14,470				2,252,322
Commercial construction	Commercial construction	1,014,211			—			276			—			343			1,014,830			Commercial construction			1,597,268				447				—				—				133				1,597,848
Equipment financing	Equipment financing	1,079,180			1,415			685			—			1,741			1,083,021			Equipment financing			1,362,622				4,285				1,906				—				5,438				1,374,251
Total commercial	Total commercial	8,909,189			2,172			1,380			—			17,815			8,930,556			Total commercial			11,182,980				10,010				3,268				6				24,449				11,220,713
Residential mortgage	Residential mortgage	1,622,754			1,583			235			—			13,313			1,637,885			Residential mortgage			2,342,196				1,939				7				—				10,919				2,355,061
HELOC	HELOC	691,814			920			88			—			1,212			694,034			HELOC			844,888				2,709				784				—				1,888				850,269
Residential construction	Residential construction	358,741			654			—			—			420			359,815			Residential construction			441,673				20				455				—				405				442,553
Manufactured housing																				Manufactured housing			302,386				6,913				924				—				6,518				316,741
Consumer	Consumer	137,564			421			19			—			52			138,056			Consumer			148,943				237				48				9				53				149,290
Total loans	Total loans	$	11,720,062		$	5,750		$	1,722		$	—		$	32,812		$	11,760,346		Total loans			$	15,263,066			$	21,828			$	5,486			$	15			$	44,232			$	15,334,627

1819

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

The following table presents nonaccrual loans held for investment by loan class for the periods indicated (in thousands).

Nonaccrual Loans
March 31, 2022 December 31, 2021
With no allowance With an allowance Total With no allowance With an allowance Total
Owner occupied commercial real estate $ 3,851 $ 739 $ 4,590 $ 2,141 $ 573 $ 2,714
Income producing commercial real estate 6,747 473 7,220 6,873 715 7,588
Commercial & industrial 4,353 1,874 6,227 3,715 1,714 5,429
Commercial construction — 401 401 — 343 343
Equipment financing — 2,540 2,540 — 1,741 1,741
Total commercial 14,951 6,027 20,978 12,729 5,086 17,815
Residential mortgage 3,264 9,760 13,024 3,126 10,187 13,313
HELOC 322 861 1,183 219 993 1,212
Residential construction 74 138 212 280 140 420
Manufactured housing — 2,507 2,507 — — —
Consumer 3 37 40 6 46 52
Total $ 18,614 $ 19,330 $ 37,944 $ 16,360 $ 16,452 $ 32,812

The majority of nonaccrual loans with no related allowance consists of collateral dependent loans that have been individually evaluated by management and have been charged down to net realizable value with the repayment of the loan expected to be provided substantially through the operation or sale of the underlying collateral.


	Nonaccrual Loans
	March 31, 2023						December 31, 2022
	With no allowance		With an allowance		Total		With no allowance		With an allowance		Total
Owner occupied commercial real estate	$	68	$	932	$	1,000	$	276	$	247	$	523
Income producing commercial real estate	10,512		91		10,603		3,798		87		3,885
Commercial & industrial	32,161		1,115		33,276		13,917		553		14,470
Commercial construction	—		475		475		69		64		133
Equipment financing	39		5,005		5,044		85		5,353		5,438
Total commercial	42,780		7,618		50,398		18,145		6,304		24,449
Residential mortgage	1,040		10,240		11,280		2,159		8,760		10,919
HELOC	252		2,125		2,377		430		1,458		1,888
Residential construction	59		84		143		311		94		405
Manufactured housing	—		8,542		8,542		—		6,518		6,518
Consumer	3		52		55		3		50		53
Total	$	44,134	$	28,661	$	72,795	$	21,048	$	23,184	$	44,232

Risk Ratings

United categorizes commercial loans, with the exception of equipment financing receivables, into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, public information, and current industry and economic trends, among other factors. United analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continual basis. United uses the following definitions for its risk ratings:

Pass. Loans in this category are considered to have a low probability of default and do not meet the criteria of the risk categories below.

Special Mention. Loans in this category are presently protected from apparent loss; however, weaknesses exist that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities. These loans require more than the ordinary amount of supervision. Collateral values generally afford adequate coverage, but may not be immediately marketable.

Substandard. These loans are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged. Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. There is the distinct possibility that United will sustain some loss if deficiencies are not corrected. If possible, immediate corrective action is taken.

Doubtful. Specific weaknesses characterized as Substandard that are severe enough to make collection in full highly questionable and improbable. There is no reliable secondary source of full repayment.

Loss. Loans categorized as Loss have the same characteristics as Doubtful; however, probability of loss is certain. Loans classified as Loss are charged off.

Equipment Financing Receivables and Consumer Purpose Loans. United applies a pass / fail grading system to all equipment financing receivables and consumer purpose loans. Under this system, loans that are on nonaccrual status, become past due 90 days, or are in bankruptcy and 30 or more days past due are classified as “fail” and all other loans are classified as “pass”. For reporting purposes, loans in these categories that are classified as “fail” are reported as substandard and all other loans are reported as pass.

1920

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

The following tables present the risk category of term loans and, for 2023, gross charge-offs by vintage year, which is the year of origination or most recent renewal, as of the date indicated (in thousands).

Term Loans Revolvers Revolvers converted to term loans Total
As of March 31, 2022 2022 2021 2020 2019 2018 Prior
Pass
Owner occupied commercial real estate $ 211,384 $ 732,769 $ 684,940 $ 277,347 $ 148,139 $ 387,637 $ 101,245 $ 13,602 $ 2,557,063
Income producing commercial real estate 253,374 885,707 856,374 384,746 238,677 367,348 53,220 10,246 3,049,692
Commercial & industrial 148,679 676,024 266,500 172,322 140,613 113,901 757,593 6,477 2,282,109
Commercial construction 143,386 589,176 376,267 174,597 41,754 32,214 60,297 1,869 1,419,560
Equipment financing 203,832 493,114 241,369 145,028 52,131 8,864 — — 1,144,338
Total commercial 960,655 3,376,790 2,425,450 1,154,040 621,314 909,964 972,355 32,194 10,452,762
Residential mortgage 172,860 808,686 365,321 105,661 67,863 283,248 9 4,088 1,807,736
HELOC — — — — — — 759,393 15,866 775,259
Residential construction 104,326 239,453 8,644 2,132 1,940 11,189 — 32 367,716
Manufactured housing 14,351 58,444 53,032 38,291 34,094 66,698 — — 264,910
Consumer 25,809 48,918 24,583 9,006 3,961 1,822 28,363 116 142,578
1,278,001 4,532,291 2,877,030 1,309,130 729,172 1,272,921 1,760,120 52,296 13,810,961
Special Mention
Owner occupied commercial real estate 1,855 5,093 4,395 14,815 4,281 8,134 2,446 284 41,303
Income producing commercial real estate 23,277 26,913 61,724 21,843 19,867 39,974 — — 193,598
Commercial & industrial 156 2,683 1,161 4,252 708 496 4,549 190 14,195
Commercial construction 13,678 70 6,921 13,152 9,019 6,188 — — 49,028
Equipment financing — — — — — — — — —
Total commercial 38,966 34,759 74,201 54,062 33,875 54,792 6,995 474 298,124
Residential mortgage — — — — — — — — —
HELOC — — — — — — — — —
Residential construction — — — — — — — — —
Manufactured housing — — — — — — — — —
Consumer — — — — — — — — —
38,966 34,759 74,201 54,062 33,875 54,792 6,995 474 298,124
Substandard
Owner occupied commercial real estate 4,927 10,814 405 3,178 3,800 15,178 156 1,150 39,608
Income producing commercial real estate 10,198 7,396 15,008 3,677 29,045 19,284 169 66 84,843
Commercial & industrial 195 2,496 4,545 4,657 12,659 2,017 6,755 6,627 39,951
Commercial construction — 3,413 60 254 8 9,945 — 250 13,930
Equipment financing — 943 1,081 948 298 186 — — 3,456
Total commercial 15,320 25,062 21,099 12,714 45,810 46,610 7,080 8,093 181,788
Residential mortgage 1,097 2,615 1,103 2,945 3,628 5,759 — 767 17,914
HELOC — — — — — — 335 2,145 2,480
Residential construction 317 11 — 23 51 212 — — 614
Manufactured housing — 205 530 838 897 1,686 — — 4,156
Consumer — 37 19 20 51 20 — 21 168
16,734 27,930 22,751 16,540 50,437 54,287 7,415 11,026 207,120
Total $ 1,333,701 $ 4,594,980 $ 2,973,982 $ 1,379,732 $ 813,484 $ 1,382,000 $ 1,774,530 $ 63,796 $ 14,316,205

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

Term Loans Revolvers Revolvers converted to term loans Total
As of December 31, 2021 2021 2020 2019 2018 2017 Prior
Pass
Owner occupied commercial real estate $ 643,151 $ 674,124 $ 278,702 $ 153,233 $ 139,584 $ 267,460 $ 68,354 $ 17,150 $ 2,241,758
Income producing commercial real estate 668,322 678,487 333,911 221,218 165,563 219,459 41,157 11,830 2,339,947
Commercial & industrial 638,567 270,150 178,944 136,281 50,567 72,904 514,750 4,361 1,866,524
Commercial construction 378,695 303,154 149,740 40,625 22,983 13,206 12,628 1,673 922,704
Equipment financing 563,618 271,913 167,904 63,254 13,145 903 — — 1,080,737
Total commercial 2,892,353 2,197,828 1,109,201 614,611 391,842 573,932 636,889 35,014 8,451,670
Residential mortgage 781,007 370,092 108,091 64,346 71,552 221,131 9 3,915 1,620,143
HELOC — — — — — — 676,545 14,994 691,539
Residential construction 325,111 16,301 2,802 2,278 3,144 9,352 — 33 359,021
Consumer 57,530 29,218 10,757 5,137 1,439 1,355 32,312 111 137,859
4,056,001 2,613,439 1,230,851 686,372 467,977 805,770 1,345,755 54,067 11,260,232
Special Mention
Owner occupied commercial real estate 7,772 2,979 16,639 4,374 6,007 2,641 248 286 40,946
Income producing commercial real estate 64,139 27,875 21,875 22,292 18,415 21,880 — — 176,476
Commercial & industrial 1,037 1,831 2,740 597 273 303 2,242 — 9,023
Commercial construction 14,283 16,237 13,149 22,479 11,766 52 — — 77,966
Equipment financing — — — — — — — — —
Total commercial 87,231 48,922 54,403 49,742 36,461 24,876 2,490 286 304,411
Residential mortgage — — — — — — — — —
HELOC — — — — — — — — —
Residential construction — — — — — — — — —
Consumer — — — — — — — — —
87,231 48,922 54,403 49,742 36,461 24,876 2,490 286 304,411
Substandard
Owner occupied commercial real estate 11,987 1,049 4,216 3,712 5,829 11,088 — 1,100 38,981
Income producing commercial real estate 15,485 12,618 3,779 29,212 6,726 16,531 — 84 84,435
Commercial & industrial 2,741 1,615 5,284 12,685 1,232 5,863 4,326 869 34,615
Commercial construction 3,464 157 272 11 9,750 255 — 251 14,160
Equipment financing 428 590 676 503 84 3 — — 2,284
Total commercial 34,105 16,029 14,227 46,123 23,621 33,740 4,326 2,304 174,475
Residential mortgage 3,339 1,585 2,813 3,229 1,205 4,744 — 827 17,742
HELOC — — — — — — 329 2,166 2,495
Residential construction 407 — 30 51 — 306 — — 794
Consumer 37 16 22 26 22 50 3 21 197
37,888 17,630 17,092 49,429 24,848 38,840 4,658 5,318 195,703
Total $ 4,181,120 $ 2,679,991 $ 1,302,346 $ 785,543 $ 529,286 $ 869,486 $ 1,352,903 $ 59,671 $ 11,760,346



	Term Loans by Origination Year												Revolvers		Revolvers converted to term loans		Total
As of March 31, 2023	2023		2022		2021		2020		2019		Prior

Owner occupied commercial real estate:
Pass	$	181,897	$	689,185	$	711,249	$	624,718	$	233,961	$	408,712	$	185,380	$	15,329	$	3,050,431
Special Mention	1,575		6,059		4,294		7,797		10,188		7,311		6,910		277		44,411
Substandard	2,510		9,804		12,504		6,360		3,060		9,139		210		2,769		46,356

Total owner occupied commercial real estate	$	185,982	$	705,048	$	728,047	$	638,875	$	247,209	$	425,162	$	192,500	$	18,375	$	3,141,198
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	207	$	—	$	—	$	207
Income producing commercial real estate:
Pass	$	156,012	$	861,022	$	785,978	$	759,153	$	266,389	$	450,664	$	62,077	$	6,697	$	3,347,992
Special Mention	10,992		41,994		21,382		25,837		18,019		27,425		359		160		146,168
Substandard	26,051		33,928		1,026		17,187		17,782		21,183		—		59		117,216

Total income producing commercial real estate	$	193,055	$	936,944	$	808,386	$	802,177	$	302,190	$	499,272	$	62,436	$	6,916	$	3,611,376
Current period gross charge-offs	$	—	$	2,781	$	—	$	—	$	—	$	—	$	—	$	—	$	2,781
Commercial & industrial
Pass	$	145,494	$	579,840	$	383,076	$	178,455	$	137,606	$	207,290	$	610,517	$	21,871	$	2,264,149
Special Mention	59		2,054		23,456		917		964		875		6,406		295		35,026
Substandard	4,187		11,286		40,400		14,873		4,315		10,292		51,657		5,535		142,545
Doubtful/Loss	—		—		—		—		—		1		—		—		1
Total commercial & industrial	$	149,740	$	593,180	$	446,932	$	194,245	$	142,885	$	218,458	$	668,580	$	27,701	$	2,441,721
Current period gross charge-offs	$	—	$	639	$	—	$	2	$	99	$	41	$	—	$	117	$	898
Commercial construction
Pass	$	215,382	$	743,077	$	392,462	$	253,806	$	81,157	$	33,032	$	59,994	$	1,336	$	1,780,246
Special Mention	29		394		31		55		13,157		—		—		—		13,666
Substandard	390		264		36		1,563		1		9,586		—		243		12,083

Total commercial construction	$	215,801	$	743,735	$	392,529	$	255,424	$	94,315	$	42,618	$	59,994	$	1,579	$	1,805,995
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Equipment financing:
Pass	$	226,702	$	643,405	$	335,672	$	139,705	$	79,143	$	16,118	$	—	$	—	$	1,440,745
Substandard	—		1,999		2,404		1,100		386		132		—		—		6,021

Total equipment financing	$	226,702	$	645,404	$	338,076	$	140,805	$	79,529	$	16,250	$	—	$	—	$	1,446,766
Current period gross charge-offs	$	—	$	1,222	$	1,754	$	534	$	321	$	196	$	—	$	—	$	4,027
Residential mortgage:
Pass	$	229,475	$	1,011,313	$	775,540	$	344,462	$	93,823	$	283,417	$	284	$	3,515	$	2,741,829
Substandard	188		1,351		1,238		1,203		1,496		7,778		—		297		13,551
Total residential mortgage	$	229,663	$	1,012,664	$	776,778	$	345,665	$	95,319	$	291,195	$	284	$	3,812	$	2,755,380
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	19	$	—	$	—	$	19
Home equity lines of credit
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	901,330	$	25,958	$	927,288
Substandard	—		—		—		—		—		—		168		2,641		2,809
Total home equity lines of credit	$	—	$	—	$	—	$	—	$	—	$	—	$	901,498	$	28,599	$	930,097
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	121	$	121
Residential construction
Pass	$	85,484	$	322,159	$	65,242	$	8,692	$	1,577	$	8,119	$	—	$	31	$	491,304
Substandard	454		—		435		—		19		144		—		—		1,052
Total residential construction	$	85,938	$	322,159	$	65,677	$	8,692	$	1,596	$	8,263	$	—	$	31	$	492,356
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Manufactured housing
Pass	$	15,660	$	76,558	$	53,747	$	47,617	$	34,198	$	88,903	$	—	$	—	$	316,683
Substandard	152		1,582		1,634		1,828		849		3,583		—		—		9,628
Total consumer	$	15,812	$	78,140	$	55,381	$	49,445	$	35,047	$	92,486	$	—	$	—	$	326,311
Current period gross charge-offs	$	3	$	266	$	95	$	99	$	65	$	126	$	—	$	—	$	654
Consumer
Pass	$	31,666	$	62,905	$	29,042	$	14,025	$	3,215	$	2,642	$	29,723	$	127	$	173,345
Substandard	—		16		82		30		1		24		5		—		158
Total consumer	$	31,666	$	62,921	$	29,124	$	14,055	$	3,216	$	2,666	$	29,728	$	127	$	173,503
Current period gross charge-offs	$	659	$	44	$	41	$	16	$	13	$	—	$	1	$	43	$	817

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

~~Troubled Debt Restructurings~~


	Term Loans												Revolvers		Revolvers converted to term loans		Total
As of December 31, 2022	2022		2021		2020		2019		2018		Prior
Pass
Owner occupied commercial real estate	$	669,451	$	671,395	$	611,900	$	204,990	$	127,738	$	253,890	$	114,975	$	5,779	$	2,660,118
Income producing commercial real estate	812,804		753,936		733,946		248,259		171,108		255,485		50,026		9,953		3,035,517
Commercial & industrial	535,594		388,851		186,292		134,789		119,547		71,503		670,161		15,880		2,122,617
Commercial construction	732,147		391,963		256,087		78,778		11,977		19,973		70,819		1,433		1,563,177
Equipment financing	714,044		374,030		162,463		93,690		22,753		1,214		—		—		1,368,194
Total commercial	3,464,040		2,580,175		1,950,688		760,506		453,123		602,065		905,981		33,045		10,749,623
Residential mortgage	894,960		742,821		329,762		91,300		55,785		223,846		8		3,133		2,341,615
HELOC	—		—		—		—		—		—		824,153		23,948		848,101
Residential construction	344,443		82,289		4,478		1,742		1,545		7,549		—		31		442,077
Manufactured housing	78,097		54,976		48,908		34,836		31,060		61,148		—		—		309,025
Consumer	71,899		29,322		15,406		3,987		1,837		588		25,963		126		149,128
	4,853,439		3,489,583		2,349,242		892,371		543,350		895,196		1,756,105		60,283		14,839,569
Special Mention
Owner occupied commercial real estate	4,236		8,036		4,641		10,299		1,232		11,596		3,875		279		44,194
Income producing commercial real estate	41,423		1,137		44,802		32,821		21,647		50		805		—		142,685
Commercial & industrial	1,695		21,745		2,686		1,047		1,244		167		10,449		309		39,342
Commercial construction	850		33		1,640		13,237		4,891		28		—		—		20,679
Equipment financing	—		—		—		—		—		—		—		—		—
Total commercial	48,204		30,951		53,769		57,404		29,014		11,841		15,129		588		246,900
Residential mortgage	—		—		—		—		—		—		—		—		—
HELOC	—		—		—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—		—		—
Manufactured housing	—		—		—		—		—		—		—		—		—
Consumer	—		—		—		—		—		—		—		—		—
	48,204		30,951		53,769		57,404		29,014		11,841		15,129		588		246,900
Substandard
Owner occupied commercial real estate	9,835		77		2,873		4,490		1,204		8,055		209		3,611		30,354
Income producing commercial real estate	52,384		1,357		1,867		4,180		13,209		10,365		—		62		83,424
Commercial & industrial	10,431		19,477		3,880		4,557		11,019		1,189		39,333		477		90,363
Commercial construction	133		—		45		2		3,876		9,693		—		243		13,992
Equipment financing	1,625		2,160		1,303		705		236		28		—		—		6,057
Total commercial	74,408		23,071		9,968		13,934		29,544		29,330		39,542		4,393		224,190
Residential mortgage	1,195		964		1,364		1,836		2,589		5,296		—		202		13,446
HELOC	—		—		—		—		—		—		93		2,075		2,168
Residential construction	32		268		—		20		3		153		—		—		476
Manufactured housing	1,130		1,267		1,427		990		1,188		1,714		—		—		7,716
Consumer	20		77		34		1		25		4		1		—		162
	76,785		25,647		12,793		16,781		33,349		36,497		39,636		6,670		248,158

Total	$	4,978,428	$	3,546,181	$	2,415,804	$	966,556	$	605,713	$	943,534	$	1,810,870	$	67,541	$	15,334,627

~~As of March 31, 2022 and December 31, 2021, United had TDRs totaling $51.2 million and $52.4 million, respectively.~~

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Modifications to Borrowers Experiencing Financial Difficulty

Loans modified under the terms of a ~~TDR~~FDM during the three months ended March 31, ~~2022 and 2021~~2023 are presented in the following ~~table. In addition, the~~ table presents loans modified under the terms of a TDR that defaulted (became 90 days or more delinquent or otherwise in default of modified terms) during the periods presented and were initially restructured within one year prior to default (~~dollars~~ in thousands).

New TDRs TDRs Modified Within the Previous Twelve Months That Have Subsequently Defaulted
Post-Modification Amortized Cost by Type of Modification
Number of
Contracts
Rate
Reduction Structure Other Total Number of
Contracts Amortized Cost
Three Months Ended March 31, 2022
Owner occupied commercial real estate — $ — $ — $ — $ — — $ —
Income producing commercial real estate — — — — — — —
Commercial & industrial — — — — — — —
Commercial construction — — — — — — —
Equipment financing 16 — 1,794 — 1,794 5 107
Total commercial 16 — 1,794 — 1,794 5 107
Residential mortgage — — — — — — —
HELOC 7 — 1,242 6 1,248 — —
Residential construction — — — — — — —
Manufactured housing — — — — — — —
Consumer — — — — — — —
Total loans 23 $ — $ 3,036 $ 6 $ 3,042 5 $ 107
Three Months Ended March 31, 2021
Owner occupied commercial real estate — $ — $ — $ — $ — — $ —
Income producing commercial real estate 2 — — 1,319 1,319 — —
Commercial & industrial 2 — — 103 103 1 11
Commercial construction 1 — 309 — 309 — —
Equipment financing 28 — 2,136 — 2,136 3 62
Total commercial 33 — 2,445 1,422 3,867 4 73
Residential mortgage 1 — 69 — 69 3 413
HELOC — — — — — — —
Residential construction — — — — — — —
Consumer — — — — — — —
Total loans 34 $ — $ 2,514 $ 1,422 $ 3,936 7 $ 486


	New FDMs
	Post-Modification Amortized Cost by Type of Modification
	Extension		Payment Delay		Rate Reduction & Extension		Total		% of Total Class of Receivable














Three Months Ended March 31, 2023


Commercial & industrial	$	—	$	6,170	$	—	$	6,170	0.3	%

Equipment financing	5,211		—		—		5,211		0.4

Residential mortgage	—		—		57		57		—


Manufactured housing	—		—		152		152		—

Total loans	$	5,211	$	6,170	$	209	$	11,590	0.1

Equipment financing FDMs typically consist of one or more three-month extensions beyond the original maturity date.

For the three months ended March 31, 2023, commercial and industrial payment delay modifications consisted of one or more three-month periods during which principal payments were deferred but interest payments continued to be paid.

During the three months ended March 31, 2023, FDMs categorized as rate reduction and extensions in the residential mortgage and manufactured housing categories resulted in a decrease in the weighted average interest rate on these FDMs of 621 bps and extended the weighted average maturity by 6.5 years.

There have been no FDMs modified during 2023 that have subsequently defaulted under modified loan terms.

Allowance for Credit Losses

The ACL for loans represents management’s estimate of life of loan credit losses in the portfolio as of the end of the period. The ACL related to unfunded commitments is included in other liabilities in the consolidated balance sheet.

At both March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, United used a one-year reasonable and supportable forecast period. Expected credit losses were estimated using a regression model for each segment based on historical data from peer banks combined with a third party vendor’s baseline economic forecast to predict the change in credit losses. These estimates were then combined with a starting value that was based on United’s recent default experience to produce an expected default rate, with the results subject to a floor. ~~At March 31, 2022, United~~In the case of residential construction and multifamily loans (included in income producing commercial real estate), the expected default rate was adjusted by a model overlay based on expectations of future performance. For the first quarter of 2023, management applied qualitative factors to the model output for income producing commercial real estate and equipment finance portfolios. With regard to income producing commercial real estate, the qualitative factors reflected continued credit concerns related to the senior care portfolio, elevated criticized loans relative to the pre-pandemic period and inflationary concerns related to the impact of rising rates on commercial real estate values. Qualitative factors for the equipment finance portfolio ~~reflected management’s approximation of long-term loss rates.~~to account for current economic trends not fully captured in the model.

For periods beyond the reasonable and supportable forecast period of one year, United reverted to historical credit loss information on a straight line basis over two years. For ~~all~~most collateral types, ~~excluding residential mortgage,~~ United reverted to through-the-cycle average default rates using peer data from 2000 to 2017. For loans secured by residential mortgages and manufactured housing, the peer data was adjusted for changes in lending practices designed to ~~prevent~~mitigate the magnitude of losses observed during the 2008 mortgage crisis.

~~PPP loans were considered low risk assets due to the related 100% guarantee by the SBA and were therefore excluded from the calculation.~~

2223

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

The following table presents the balance and activity in the ACL by portfolio segment for the periods indicated (in thousands).


		Three Months Ended March 31, 2022													Three Months Ended March 31, 2023
		Beginning Balance		Initial ACL - PCD loans (1)		Charge-Offs		Recoveries		Provision		Ending Balance			Beginning Balance		Initial ACL - PCD loans (1)		Charge-Offs		Recoveries		Provision		Ending Balance
Owner occupied commercial real estate	Owner occupied commercial real estate	$	14,282	$	266	$	—	$	45	$	1,352	$	15,945	Owner occupied commercial real estate	$	19,834	$	181	$	(207)	$	117	$	906	$	20,831
Income producing commercial real estate	Income producing commercial real estate	24,156		4,366		—		290		4,727		33,539		Income producing commercial real estate	32,082		307		(2,781)		475		3,524		33,607
Commercial & industrial	Commercial & industrial	16,592		2,337		(3,594)		665		2,386		18,386		Commercial & industrial	23,504		1,358		(898)		673		3,675		28,312
Commercial construction	Commercial construction	9,956		2,857		(41)		414		596		13,782		Commercial construction	20,120		39		—		37		1,877		22,073
Equipment financing	Equipment financing	16,290		—		(948)		681		3,241		19,264		Equipment financing	23,395		—		(4,027)		652		6,175		26,195
Residential mortgage	Residential mortgage	12,390		385		(53)		150		2,092		14,964		Residential mortgage	20,809		157		(19)		106		3,029		24,082
HELOC	HELOC	6,568		60		(9)		90		419		7,128		HELOC	8,707		534		(121)		88		1,129		10,337
Residential construction	Residential construction	1,847		1		—		23		58		1,929		Residential construction	2,049		124		—		15		(145)		2,043
Manufactured housing	Manufactured housing	—		2,438		(173)		9		4,809		7,083		Manufactured housing	8,098		—		(654)		26		954		8,424
Consumer	Consumer	451		27		(806)		279		834		785		Consumer	759		4		(817)		251		433		630
ACL - loans	ACL - loans	102,532		12,737		(5,624)		2,646		20,514		132,805		ACL - loans	159,357		2,704		(9,524)		2,440		21,557		176,534
ACL - unfunded commitments	ACL - unfunded commitments	10,992		—		—		—		2,572		13,564		ACL - unfunded commitments	21,163		—		—		—		226		21,389
Total ACL	Total ACL	$	113,524	$	12,737	$	(5,624)	$	2,646	$	23,086	$	146,369	Total ACL	$	180,520	$	2,704	$	(9,524)	$	2,440	$	21,783	$	197,923

Three Months Ended March 31, 2021
Beginning
Balance Charge-Offs Recoveries (Release)
Provision Ending
Balance
Owner occupied commercial real estate $ 20,673 $ — $ 240 $ (1,631) $ 19,282
Income producing commercial real estate 41,737 (1,007) 16 (5,835) 34,911
Commercial & industrial 22,019 (2,894) 5,647 (3,022) 21,750
Commercial construction 10,952 (178) 156 (358) 10,572
Equipment financing 16,820 (2,058) 547 1,891 17,200
Residential mortgage 15,341 (215) 123 (669) 14,580
HELOC 8,417 — 73 (1,610) 6,880
Residential construction 764 (10) 70 538 1,362
Consumer 287 (471) 266 247 329
ACL - loans 137,010 (6,833) 7,138 (10,449) 126,866
ACL - unfunded commitments 10,558 — — (1,832) 8,726
Total ACL $ 147,568 $ (6,833) $ 7,138 $ (12,281) $ 135,592
(1) Represents the initial ACL related to PCD loans acquired in the Progress transaction.


	Three Months Ended March 31, 2022
	Beginning Balance		Initial ACL - PCD loans (1)		Charge-Offs		Recoveries		Provision		Ending Balance
Owner occupied commercial real estate	$	14,282	$	266	$	—	$	45	$	1,352	$	15,945
Income producing commercial real estate	24,156		4,366		—		290		4,727		33,539
Commercial & industrial	16,592		2,337		(3,594)		665		2,386		18,386
Commercial construction	9,956		2,857		(41)		414		596		13,782
Equipment financing	16,290		—		(948)		681		3,241		19,264
Residential mortgage	12,390		385		(53)		150		2,092		14,964
HELOC	6,568		60		(9)		90		419		7,128
Residential construction	1,847		1		—		23		58		1,929
Manufactured housing	—		2,438		(173)		9		4,809		7,083
Consumer	451		27		(806)		279		834		785
ACL - loans	102,532		12,737		(5,624)		2,646		20,514		132,805
ACL - unfunded commitments	10,992		—		—		—		2,572		13,564
Total ACL	$	113,524	$	12,737	$	(5,624)	$	2,646	$	23,086	$	146,369

(1) Represents the initial ACL related to PCD loans acquired in the Reliant transaction.

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 7 – Derivatives and Hedging Activities

The table below presents the fair value of derivative financial instruments, which are included in other assets and other liabilities on the consolidated balance sheet, as of the dates indicated (in thousands):


		March 31, 2022								December 31, 2021									March 31, 2023								December 31, 2022
		Notional Amount			Fair Value					Notional Amount			Fair Value						Notional Amount			Fair Value					Notional Amount			Fair Value
				Derivative Asset			Derivative Liability					Derivative Asset			Derivative Liability						Derivative Asset			Derivative Liability					Derivative Asset			Derivative Liability
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:																			Derivatives designated as hedging instruments:
Cash flow hedge of subordinated debt	Cash flow hedge of subordinated debt	$	100,000		$	10,649		$	—	$	100,000		$	6,389		$	—	Cash flow hedge of subordinated debt	$	100,000		$	14,503		$	—	$	100,000		$	16,191		$	—
Cash flow hedge of trust preferred securities	Cash flow hedge of trust preferred securities	20,000			—			—		20,000			—			—		Cash flow hedge of trust preferred securities	20,000			—			—		20,000			—			—
Fair value hedge of brokered time deposits	Fair value hedge of brokered time deposits	—			—			—		10,000			—			—		Fair value hedge of brokered time deposits	—			—			—		—			—			—
Total	Total	120,000			10,649			—		130,000			6,389			—		Total	120,000			14,503			—		120,000			16,191			—

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:																	Derivatives not designated as hedging instruments:
Customer derivative positions	Customer derivative positions	1,161,386			5,426			38,850		1,206,145			28,656			10,663		Customer derivative positions	1,165,444			2,407			76,901		1,097,578			341			86,358
Dealer offsets to customer derivative positions	Dealer offsets to customer derivative positions	1,171,702			8,479			1,686		1,230,885			974			9,232		Dealer offsets to customer derivative positions	1,165,444			23,756			2,303		1,097,578			22,393			274
Risk participations	Risk participations	69,017			12			1		69,385			16			7		Risk participations	78,463			4			1		88,586			15			1
Mortgage banking - loan commitment	Mortgage banking - loan commitment	97,711			1,356			—		110,897			3,450			—		Mortgage banking - loan commitment	74,898			1,884			3		19,685			394			—
Mortgage banking - forward sales commitment	Mortgage banking - forward sales commitment	184,500			3,016			—		201,419			67			202		Mortgage banking - forward sales commitment	140,471			97			684		49,750			198			71
Bifurcated embedded derivatives	Bifurcated embedded derivatives	51,935			6,534			—		51,935			2,928			—		Bifurcated embedded derivatives	51,935			9,460			—		51,935			11,104			—
Dealer offsets to bifurcated embedded derivatives	Dealer offsets to bifurcated embedded derivatives	51,935			—			8,529		51,935			—			5,041		Dealer offsets to bifurcated embedded derivatives	51,935			—			11,191		51,935			—			12,839
Total	Total	2,788,186			24,823			49,066		2,922,601			36,091			25,145		Total	2,728,590			37,608			91,083		2,457,047			34,445			99,543

Total derivatives	Total derivatives	$	2,908,186		$	35,472		$	49,066	$	3,052,601		$	42,480		$	25,145	Total derivatives	$	2,848,590		$	52,111		$	91,083	$	2,577,047		$	50,636		$	99,543

Total gross derivative instruments	Total gross derivative instruments				$	35,472		$	49,066				$	42,480		$	25,145	Total gross derivative instruments				$	52,111		$	91,083				$	50,636		$	99,543
Less: Amounts subject to master netting agreements	Less: Amounts subject to master netting agreements				(1,753)			(1,753)					(694)			(694)		Less: Amounts subject to master netting agreements				(2,401)			(2,401)					(346)			(346)
Less: Cash collateral received/pledged	Less: Cash collateral received/pledged				(18,682)			(9,082)					(6,620)			(14,148)		Less: Cash collateral received/pledged				(38,427)			(11,645)					(38,386)			(13,089)
Net amount	Net amount				$	15,037		$	38,231				$	35,166		$	10,303	Net amount				$	11,283		$	77,037				$	11,904		$	86,108

United clears certain derivatives centrally through the CME. CME rules legally characterize variation margin payments for centrally cleared derivatives as settlements of the derivatives’ exposure rather than as collateral. As a result, the variation margin payment and the related derivative instruments are considered a single unit of account for accounting purposes. Variation margin, as determined by the CME, is settled daily. As a result, derivative contracts that clear through the CME have an estimated fair value of zero.

Hedging Derivatives

Cash Flow Hedges of Interest Rate Risk

United enters into cash flow hedges to mitigate exposure to the variability of future cash flows or other forecasted transactions. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, United utilized interest rate caps and swaps to hedge the variability of cash flows due to changes in interest rates on certain of its variable-rate subordinated debt and trust preferred securities. United considers these derivatives to be highly effective at achieving offsetting changes in cash flows attributable to changes in interest rates. Therefore, changes in the fair value of these derivative instruments are recognized in OCI. Gains and losses related to changes in fair value are reclassified into earnings in the periods the hedged forecasted transactions occur. Losses representing amortization of the premium recorded on cash flow hedges, which is a component excluded from the assessment of effectiveness, are recognized in earnings on a straight-line basis in the same caption as the hedged item over the term of the hedge. Over the next twelve months, United expects to reclassify ~~$189,000~~$4.82 million of gains from AOCI into earnings related to these agreements.

Fair Value Hedges of Interest Rate Risk

United is exposed to changes in the fair value of certain of its fixed-rate obligations due to changes in interest rates. United uses interest rate derivatives to manage its exposure to changes in fair value on these instruments attributable to changes in interest rates. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. United includes the gain or loss on the hedged items in the same income statement line item as the offsetting loss or gain on the related derivatives.

2425

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

At December 31, 2021, United had an interest rate swap that was designated as a fair value hedge of fixed-rate brokered time deposits. During the first quarter of 2022, the hedged brokered deposit and the associated swap matured. The swap involved the receipt of fixed-rate amounts from a counterparty in exchange for United making variable rate payments over the life of the agreements.

The table below presents the effect of derivatives in hedging relationships, all of which are interest rate contracts, on the consolidated statement of income for the periods indicated (in thousands).


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022

Total interest expense presented in the consolidated statements of income	Total interest expense presented in the consolidated statements of income		$	(7,267)	$	(9,478)	Total interest expense presented in the consolidated statements of income		$	(68,017)	$	(7,267)
Effect of hedging relationships on interest expense:	Effect of hedging relationships on interest expense:						Effect of hedging relationships on interest expense:

Net income (expense) recognized on fair value hedges			28		78
Net income recognized on fair value hedges							Net income recognized on fair value hedges		—		28

Net expense recognized on cash flow hedges (1)	Net expense recognized on cash flow hedges (1)		(141)		(144)		Net expense recognized on cash flow hedges (1)		822		(141)

(1) Includes premium amortization expense excluded from the assessment of hedge effectiveness of $116,000 for both the three months ended March 31, ~~2022~~2023 and ~~2021, respectively.~~2022.

Derivatives Not Designated as Hedging Instruments

Customer derivative positions include swaps, caps, and collars between United and certain commercial loan customers with offsetting positions to dealers under a back-to-back program. In addition, United occasionally enters into credit risk participation agreements with counterparty banks to accept or transfer a portion of the credit risk related to interest rate swaps. The agreements, which are typically executed in conjunction with a participation in a loan with the same customer, allow customers to execute an interest rate swap with one bank while allowing for the distribution of the credit risk among participating members.

United also has 3three interest rate swap contracts that are not designated as hedging instruments but are economic hedges of market-linked brokered certificates of deposit. The market-linked brokered certificates of deposit contain embedded derivatives that are bifurcated from the host instruments and are marked to market through earnings. The fair value marks on the market-linked swaps and the bifurcated embedded derivatives tend to move in opposite directions with changes in 90-day LIBOR and therefore provide an economic hedge.

In addition, United originates certain residential mortgage loans with the intention of selling these loans. Between the time United enters into an interest-rate lock commitment to originate a residential mortgage loan that is to be held for sale and the time the loan is funded and eventually sold, United is subject to the risk of variability in market prices. United enters into forward sale agreements to mitigate risk and to protect the expected gain on the eventual loan sale. The commitments to originate residential mortgage loans and forward loan sales commitments are freestanding derivative instruments. Fair value adjustments on these derivative instruments are recorded within mortgage loan gains and other related fee income in the consolidated statements of income.

The table below presents the gains and losses recognized in income on derivatives not designated as hedging instruments for the periods indicated (in thousands).


		Location of Gain (Loss) Recognized in Income on Derivatives				Amount of Gain (Loss) Recognized in Income on Derivatives										Location of Gain (Loss) Recognized in Income on Derivatives			Amount of Gain (Loss) Recognized in Income on Derivatives
					Location of Gain (Loss) Recognized in Income on Derivatives									Three Months Ended March 31,
				2022				2021										2023			2022
Three Months Ended March 31,

Customer derivatives and dealer offsets	Customer derivatives and dealer offsets		Other noninterest income					$	769			$	1,897		Customer derivatives and dealer offsets		Other noninterest income					$	367	$	769
Bifurcated embedded derivatives and dealer offsets	Bifurcated embedded derivatives and dealer offsets	Other noninterest income				113				459		Bifurcated embedded derivatives and dealer offsets				Other noninterest income			(533)			113

Mortgage banking derivatives	Mortgage banking derivatives	Mortgage loan revenue				4,634				3,836		Mortgage banking derivatives				Mortgage loan revenue			1,227			4,634
Risk participations	Risk participations	Other noninterest income				1				(205)		Risk participations				Other noninterest income			(12)			1
						$	5,517			$	5,987								$	1,049		$	5,517

Credit-Risk-Related Contingent Features

United manages its credit exposure on derivatives transactions by entering into a bilateral credit support agreement with each non-customer counterparty. The credit support agreements require collateralization of exposures beyond specified minimum threshold amounts. The details of these agreements, including the minimum thresholds, vary by counterparty.

United’s agreements with each of its derivative counterparties provide that if either party defaults on any of its indebtedness, then it could also be declared in default on its derivative obligations. The agreements with derivative counterparties also include provisions that if not met, could result in United being declared in default. United has agreements with certain of its derivative counterparties that

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

provide that if United fails to maintain its status as a well-capitalized institution or is subject to a prompt corrective action directive, the counterparty could terminate the derivative positions and United would be required to settle its obligations under the agreements.

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Derivatives that are centrally cleared do not have credit-risk-related features that would require additional collateral if United’s credit rating were downgraded.

Note 8 – Goodwill and Other Intangible Assets

The carrying amount of goodwill and other intangible assets as of the dates indicated is summarized below (in thousands). :

March 31, 2022 December 31, 2021
Core deposit intangible $ 52,692 $ 38,192
Less: accumulated amortization (27,466) (25,870)
Net core deposit intangible 25,226 12,322
Customer relationship intangible 8,400 8,400
Less: accumulated amortization (520) (322)
Net customer relationship intangible 7,880 8,078
Total intangibles subject to amortization, net 33,106 20,400
Goodwill 751,174 452,007
Total goodwill and other intangible assets, net $ 784,280 $ 472,407


	March 31, 2023		December 31, 2022
Core deposit intangible	$	86,880	$	46,900
Less: accumulated amortization	(29,442)		(26,112)
Net core deposit intangible	57,438		20,788
Customer relationship intangible	8,400		8,400
Less: accumulated amortization	(1,312)		(1,114)
Net customer relationship intangible	7,088		7,286
Total intangibles subject to amortization, net (1)	64,526		28,074
Goodwill	896,718		751,174
Total goodwill and other intangible assets, net	$	961,244	$	779,248

(1) As intangible assets become fully amortized, they are excluded from balances presented.

During the first quarter of ~~2022,~~2023, as a result of the ~~Reliant~~Progress acquisition, United recorded a core deposit intangible of ~~$14.5~~$40.0 million. See Note 4 for further detail.

The following is a summary of changes in the carrying amounts of goodwill (in thousands):

Three Months Ended
March 31,
2022 2021
Balance, beginning of period (1)
$ 452,007 $ 367,809
Acquisitions 299,167 —
Balance, end of period (1)
$ 751,174 $ 367,809


	Three Months Ended March 31,
		2023		2022

Balance, beginning of period (1)		$	751,174	$	452,007
Acquisitions		145,544		299,167

Balance, end of period (1)		$	896,718	$	751,174

(1) Goodwill balances are shown net of accumulated impairment losses of $306 million incurred prior to ~~2021~~.2022.

The estimated aggregate amortization expense for future periods for finite lived intangibles is as follows (in thousands):

Year
Remainder of 2022 $ 5,033
2023 5,903
2024 5,018
2025 4,051
2026 3,303
Thereafter 9,798
Total $ 33,106



Remainder of 2023	$	9,942
2024	11,791
2025	10,031
2026	8,491
2027	6,950
Thereafter	17,321
Total	$	64,526

Note 9 – Short-term Borrowings and FHLB Advances

At March 31, 2023 and December 31, 2022, short-term borrowings consisted of repurchase agreements, which are borrowings secured by investment securities. The following table presents the remaining contractual maturity of repurchase agreements by collateral pledged as of the date indicated (in thousands).


	Remaining Contractual Maturity of the Agreements
	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater than 90 days		Total
March 31, 2023


State and political subdivisions	7,219		—		—		—		7,219




Total	$	7,219	$	—	$	—	$	—	$	7,219

December 31, 2022
U.S. Treasuries	$	158,933	$	—	$	—	$	—	$	158,933






Total	$	158,933	$	—	$	—	$	—	$	158,933

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

~~Note 9 - Long-term Debt~~

United is obligated to promptly transfer additional securities if the market value of the pledged securities falls below the repurchase agreement price. United manages this risk by maintaining a portfolio of unpledged securities that it believes is sufficient to cover a decline in the market value of the securities sold under agreements to repurchase. At March 31, 2023, repurchase agreements were collateralized by securities with a carrying amount of $9.97 million. At December 31, 2022, repurchase agreements were collateralized by securities with a carrying amount of $163 million.

~~Long-term debt consisted~~At March 31, 2023 and December 31, 2022, United had FHLB advances totaling $30.0 million and $550 million, respectively. The balance outstanding at March 31, 2023 matures in 2023 and has an interest rate of ~~the following~~ ~~(in thousands)~~:

March 31,
2022 December 31, 2021 Issue
Date Stated
Maturity
Date Earliest
Call
Date Interest Rate
2027 senior debentures 35,000 35,000 2015 2027 2025 5.500% through August 2025, 3-month LIBOR plus 3.71% thereafter
2030 senior debentures 100,000 100,000 2020 2030 2025 5.00% through June 2025, 3-month SOFR plus 4.87% thereafter
Total senior debentures 135,000 135,000
2028 subordinated debentures 100,000 100,000 2018 2028 2023 4.500% through January 2023, 3-month LIBOR plus 2.12% thereafter
2029 subordinated debentures 60,000 — 2019 2029 2024 5.125% until December 2024, 3-month SOFR plus 3.765% thereafter
Total subordinated debentures 160,000 100,000
Tidelands Statutory Trust I 8,248 8,248 2006 2036 * 3-month LIBOR plus 1.38%
Four Oaks Statutory Trust I 12,372 12,372 2006 2036 * 3-month LIBOR plus 1.35%
Community First Capital Trust I 3,093 — 2002 2032 * Prime plus 0.50%
Community First Capital Trust II 5,155 — 2005 2035 * 3-month LIBOR plus 1.50%
Community First Capital Trust III 5,464 — 2007 2037 * 3-month LIBOR plus 3.00%
Total trust preferred securities 34,332 20,620
Less net discount (5,102) (8,260)
Total long-term debt $ 324,230 $ 247,360

* Indicates currently redeemable.4.52%. United’s FHLB advances are collateralized by a blanket lien on owner occupied and income producing commercial real estate and residential mortgage loans.

~~Interest is currently paid at least semiannually for all senior and subordinated debentures and trust preferred securities. All debt instruments reported above are obligations of the Holding Company.~~

~~During the first quarter of 2022, United assumed $76.7 million in subordinated debentures and trust preferred securities as part of the Reliant acquisition. See Note 4 for further detail.~~

Note 10 – Assets and Liabilities Measured at Fair Value

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, United uses a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). United has processes in place to review the significant valuation inputs and to reassess how the instruments are classified in the valuation framework.

Fair Value 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.

In instances when the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

significant to the fair value measurement in its entirety. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The following is a description of the valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities

AFS debt securities and equity securities with readily determinable fair values are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include MBS issued by GSEs, municipal bonds, corporate debt securities, asset-backed securities and supranational entity securities and are valued based on observable inputs that include: quoted market prices for similar assets, quoted market prices that are not in an active market, or other inputs that are observable in the market and can be corroborated by observable market data for substantially the full term of the securities. Securities classified as Level 3 include those traded in less liquid markets and are valued based on estimates obtained from broker-dealers that are not directly observable or models which incorporate unobservable inputs.

Deferred Compensation Plan Assets and Liabilities

Included in other assets in the consolidated balance sheet are assets related to employee deferred compensation plans. The assets associated with these plans are invested in mutual funds and classified as Level 1. Deferred compensation liabilities, also classified as Level 1, are carried at the fair value of the obligation to the employee, which mirrors the fair value of the invested assets and is included in other liabilities in the consolidated balance sheet.

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Mortgage Loans Held for Sale

United has elected the fair value option for most of its newly originated mortgage loans held for sale in order to reduce certain timing differences and better match changes in fair values of the loans with changes in the value of derivative instruments used to economically hedge them. The fair value of mortgage loans held for sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan, and are classified as Level 2. In connection with the Reliant acquisition, United acquired certain mortgage loans held for sale for which the fair value option was not elected; these loans are carried at the lower of aggregate cost or fair value.

Derivative Financial Instruments

United uses derivatives to manage interest rate risk. The valuation of these instruments is typically determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. United also uses best effort and mandatory delivery forward loan sale commitments to hedge risk in its mortgage lending business.

United incorporates CVAs as necessary to appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, United has considered the effect of netting and any applicable credit enhancements, such as collateral postings, thresholds and guarantees.

Management has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy. However, the CVAs associated with these derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. Generally, management’s assessment of the significance of the CVAs has indicated that they are not a significant input to the overall valuation of the derivatives. In cases where management’s assessment indicates that the CVA is a significant input, the related derivative is disclosed as a Level 3 value.

Other derivatives classified as Level 3 include structured derivatives for which broker quotes, used as a key valuation input, were not observable. Risk participation agreements are classified as Level 3 instruments due to the incorporation of significant Level 3 inputs used to evaluate the probability of funding and the likelihood of customer default. Interest rate lock commitments, which relate to mortgage loan commitments, are categorized as Level 3 instruments as the fair value of these instruments is based on unobservable inputs for commitments that United does not expect to fund.

~~UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Unaudited)~~

Servicing Rights for Residential and SBA/USDA Loans

United recognizes servicing rights upon the sale of residential and SBA/USDA loans sold with servicing retained. Management has elected to carry these assets at fair value. Given the nature of these assets, the key valuation inputs are unobservable and management classifies these assets as Level 3.

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

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).


March 31, 2022		Level 1		Level 2		Level 3		Total
March 31, 2023										March 31, 2023	Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
AFS debt securities:	AFS debt securities:									AFS debt securities:
U.S. Treasuries	U.S. Treasuries	$	186,310	$	—	$	—	$	186,310	U.S. Treasuries	$	176,259	$	—	$	—	$	176,259
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	—		211,479		—		211,479		U.S. Government agencies & GSEs	—		245,643		—		245,643
State and political subdivisions	State and political subdivisions	—		335,044		—		335,044		State and political subdivisions	—		162,953		—		162,953
Residential MBS	Residential MBS	—		1,742,529		—		1,742,529		Residential MBS	—		1,686,622		—		1,686,622
Commercial MBS	Commercial MBS	—		726,154		—		726,154		Commercial MBS	—		650,688		—		650,688
Corporate bonds	Corporate bonds	—		226,223		2,332		228,555		Corporate bonds	—		197,840		2,227		200,067
Asset-backed securities	Asset-backed securities	—		479,043		—		479,043		Asset-backed securities	—		208,907		—		208,907
Equity securities with readily available fair values		4,784		1,358		—		6,142
Equity securities with readily determinable fair values										Equity securities with readily determinable fair values	12,403		1,819		—		14,222
Mortgage loans held for sale	Mortgage loans held for sale	—		39,118		—		39,118		Mortgage loans held for sale	—		18,960		—		18,960
Deferred compensation plan assets	Deferred compensation plan assets	11,577		—		—		11,577		Deferred compensation plan assets	11,244		—		—		11,244
Servicing rights for SBA/USDA loans	Servicing rights for SBA/USDA loans	—		—		6,962		6,962		Servicing rights for SBA/USDA loans	—		—		6,289		6,289
Residential mortgage servicing rights	Residential mortgage servicing rights	—		—		32,641		32,641		Residential mortgage servicing rights	—		—		36,081		36,081
Derivative financial instruments	Derivative financial instruments	—		27,570		7,902		35,472		Derivative financial instruments	—		40,763		11,348		52,111
Total assets	Total assets	$	202,671	$	3,788,518	$	49,837	$	4,041,026	Total assets	$	199,906	$	3,214,195	$	55,945	$	3,470,046

Liabilities:	Liabilities:									Liabilities:
Deferred compensation plan liability	Deferred compensation plan liability	$	11,602	$	—	$	—	$	11,602	Deferred compensation plan liability	$	11,280	$	—	$	—	$	11,280
Derivative financial instruments	Derivative financial instruments	—		40,535		8,531		49,066		Derivative financial instruments	—		79,888		11,195		91,083

Total liabilities	Total liabilities	$	11,602	$	40,535	$	8,531	$	60,668	Total liabilities	$	11,280	$	79,888	$	11,195	$	102,363


December 31, 2021		Level 1		Level 2		Level 3		Total
December 31, 2022										December 31, 2022	Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
AFS debt securities:	AFS debt securities:									AFS debt securities:
U.S. Treasuries	U.S. Treasuries	$	217,520	$	—	$	—	$	217,520	U.S. Treasuries	$	149,352	$	—	$	—	$	149,352
U.S. Government agencies & GSEs	U.S. Government agencies & GSEs	—		187,032		—		187,032		U.S. Government agencies & GSEs	—		250,116		—		250,116
State and political subdivisions	State and political subdivisions	—		275,844		—		275,844		State and political subdivisions	—		303,748		—		303,748
Residential MBS	Residential MBS	—		2,145,134		—		2,145,134		Residential MBS	—		1,795,481		—		1,795,481
Commercial MBS	Commercial MBS	—		873,851		—		873,851		Commercial MBS	—		671,912		—		671,912
Corporate bonds	Corporate bonds	—		190,771		2,395		193,166		Corporate bonds	—		210,240		2,212		212,452
Asset-backed securities	Asset-backed securities	—		604,277		—		604,277		Asset-backed securities	—		231,272		—		231,272
Equity securities with readily available fair values		—		1,302		—		1,302
Equity securities with readily determinable fair values										Equity securities with readily determinable fair values	12,278		1,359		—		13,637
Mortgage loans held for sale	Mortgage loans held for sale	—		44,109		—		44,109		Mortgage loans held for sale	—		11,794		—		11,794
Deferred compensation plan assets	Deferred compensation plan assets	11,769		—		—		11,769		Deferred compensation plan assets	11,436		—		—		11,436
Servicing rights for SBA/USDA loans	Servicing rights for SBA/USDA loans	—		—		6,513		6,513		Servicing rights for SBA/USDA loans	—		—		5,188		5,188
Residential mortgage servicing rights	Residential mortgage servicing rights	—		—		25,161		25,161		Residential mortgage servicing rights	—		—		36,559		36,559
Derivative financial instruments	Derivative financial instruments	—		35,722		6,758		42,480		Derivative financial instruments	—		39,123		11,513		50,636
Total assets	Total assets	$	229,289	$	4,358,042	$	40,827	$	4,628,158	Total assets	$	173,066	$	3,515,045	$	55,472	$	3,743,583

Liabilities:	Liabilities:									Liabilities:
Deferred compensation plan liability	Deferred compensation plan liability	$	11,795	$	—	$	—	$	11,795	Deferred compensation plan liability	$	11,460	$	—	$	—	$	11,460
Derivative financial instruments	Derivative financial instruments	—		20,097		5,048		25,145		Derivative financial instruments	—		86,703		12,840		99,543
Total liabilities	Total liabilities	$	11,795	$	20,097	$	5,048	$	36,940	Total liabilities	$	11,460	$	86,703	$	12,840	$	111,003

2930

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

The following table shows a reconciliation of the beginning and ending balances for the periods indicated for assets measured at fair value on a recurring basis using significant unobservable inputs that are classified as Level 3 values (in thousands).


		2022										2021													2023															2022
		Derivative Assets		Derivative Liabilities		SBA/USDA loan servicing rights		Residential mortgage servicing rights		Corporate Bonds		Derivative Assets		Derivative Liabilities		SBA/USDA loan servicing rights		Residential mortgage servicing rights		Corporate Bonds					Derivative Assets			Derivative Liabilities			SBA/USDA loan servicing rights			Residential mortgage servicing rights			Corporate Bonds			Derivative Assets			Derivative Liabilities			SBA/USDA loan servicing rights			Residential mortgage servicing rights			Corporate Bonds

Three Months Ended March 31,	Three Months Ended March 31,																						Three Months Ended March 31,
Beginning balance	Beginning balance	$	6,758	$	5,048	$	6,513	$	25,161	$	2,395	$	10,779	$	2,408	$	6,462	$	16,216	$	1,750		Beginning balance		$	11,513		$	12,840		$	5,188		$	36,559		$	2,212		$	6,758		$	5,048		$	6,513		$	25,161		$	2,395

Business combinations																						Business combinations		—			—			95			—			—			—			—			—			—			—
Additions	Additions	—		—		588		2,167		—		175		—		229		3,201		—			Additions		—			3			460			632			—			—			—			588			2,167			—
Transfers from Level 3	Transfers from Level 3	(290)		—		—		—		—		—		—		—		—		—			Transfers from Level 3		—			—			—			—			—			(290)			—			—			—			—
Sales and settlements	Sales and settlements	—		—		(229)		(676)		—		—		—		(191)		(1,129)		—			Sales and settlements		(11)			—			(220)			(452)			—			—			—			(229)			(676)			—
Fair value adjustments included in OCI	Fair value adjustments included in OCI	—		—		—		—		(63)		—		—		—		—		—			Fair value adjustments included in OCI		—			—			—			—			15			—			—			—			—			(63)
Fair value adjustments included in earnings	Fair value adjustments included in earnings	1,434		3,483		90		5,989		—		(2,646)		2,198		(274)		2,440		—			Fair value adjustments included in earnings		(154)			(1,648)			766			(658)			—			1,434			3,483			90			5,989			—
Ending balance	Ending balance	$	7,902	$	8,531	$	6,962	$	32,641	$	2,332	$	8,308	$	4,606	$	6,226	$	20,728	$	1,750		Ending balance		$	11,348		$	11,195		$	6,289		$	36,081		$	2,227		$	7,902		$	8,531		$	6,962		$	32,641		$	2,332

The following table presents quantitative information about significant Level 3 inputs for fair value on a recurring basis as of the dates indicated.


Level 3 Assets and Liabilities	Level 3 Assets and Liabilities	Valuation Technique	Significant Unobservable Inputs	March 31, 2022			December 31, 2021			Level 3 Assets and Liabilities	Valuation Technique	Significant Unobservable Inputs	March 31, 2023			December 31, 2022
				Range	Weighted Average		Range	Weighted Average					Range	Weighted Average		Range	Weighted Average
SBA/USDA loan servicing rights	SBA/USDA loan servicing rights	Discounted cash flow	Discount rate	0.0% - 52.1%	9.1	%	0.0% - 45.4%	10.3	%	SBA/USDA loan servicing rights	Discounted cash flow	Discount rate	3.1% - 25.0%	12.1	%	11.9% - 25.0%	17.5	%
			Prepayment rate	3.2 - 34.3	16.7		3.2 - 31.3	16.3				Prepayment rate	0.0 - 36.2	16.7		0.0 - 35.4	16.4
Residential mortgage servicing rights	Residential mortgage servicing rights	Discounted cash flow	Discount rate	9.5 - 15.0	9.5		9.5 - 10.5	9.5		Residential mortgage servicing rights	Discounted cash flow	Discount rate	9.5 - 11.5	9.5		9.5 - 11.5	9.5
			Prepayment rate	6.9 - 34.0	8.7		7.0 - 77.6	12.6				Prepayment rate	7.0 - 27.8	7.6		7.0 - 31.2	7.5
Corporate bonds										Corporate bonds	Discounted cash flow	Discount rate	5.7 - 6.1	5.9		6.1 - 6.4	6.3

Corporate bonds		Discounted cash flow	Discount rate	4.4 - 4.6	4.5		3.6 - 3.8	3.6
Derivative assets - customer derivative positions		Internal model	Estimated loss rate	100	100		33.4 - 44.0	36.0

Derivative assets - mortgage	Derivative assets - mortgage	Internal model	Pull through rate	74.1 - 100	91.1		45.9 - 100	87.2		Derivative assets - mortgage	Internal model	Pull through rate	64.7 - 100	89.2		26.5 - 100	90.7
Derivative assets and liabilities - other	Derivative assets and liabilities - other	Dealer priced	Dealer priced	N/A	N/A		N/A	N/A		Derivative assets and liabilities - other	Dealer priced	Dealer priced	N/A	N/A		N/A	N/A

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. ~~Through~~In connection with the Reliant acquisition, United acquired mortgage loans held for sale accounted for under the lower of cost or fair value method. These loans are separately disclosed under the heading “Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis” within this footnote. 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 (in thousands).

Mortgage Loans Held for Sale
March 31, 2022 December 31, 2021
Outstanding principal balance $ 38,765 $ 42,581
Fair value 39,118 44,109


Mortgage Loans Held for Sale
	March 31, 2023		December 31, 2022
Outstanding principal balance	$	18,408	$	11,473
Fair value	18,960		11,794

Gain (Loss) from Change in Fair Value on Mortgage Loans Held for Sale
Location Three Months Ended
March 31,
2022 2021
Mortgage loan gains and other related fees $ (1,174) $ (2,242)


Gain (Loss) from Change in Fair Value on Mortgage Loans Held for Sale
Location	Three Months Ended March 31,
		2023		2022
Mortgage loan gains and other related fees		$	231	$	(1,174)

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.

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

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 March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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
March 31, 2022
Loans held for investment $ — $ — $ 1,287 $ 1,287
Mortgage loans held for sale — 36,073 — 36,073
December 31, 2021
Loans held for investment $ — $ — $ 2,536 $ 2,536


	Level 1		Level 2		Level 3		Total
March 31, 2023
Loans held for investment	$	—	$	—	$	11,582	$	11,582
Mortgage loans held for sale	—		—		1,430		1,430

December 31, 2022
Loans held for investment	$	—	$	—	$	7,808	$	7,808
Mortgage loans held for sale	—		—		1,806		1,806

~~As of March 31, 2022, mortgage~~Mortgage loans held for sale that were acquired from Reliant were subject to a nonrecurring fair value adjustment resulting from the application of the lower of the amortized cost or fair value accounting. As of March 31, 2023, these loans were classified as nonrecurring Level 3 because the valuation of these loans was based on indicative bids provided by a broker, not corroborated by market transactions.

Loans held for investment that are reported above as being measured at fair value on a nonrecurring basis are generally impaired loans that have either been partially charged off or have specific reserves assigned to them. Nonaccrual loans that are collateral dependent are generally written down to net realizable value, which reflects fair value less the estimated costs to sell. Specific reserves that are established based on appraised value of collateral are considered nonrecurring fair value adjustments as well. When the fair value of the collateral is based on an observable market price or a current appraised value, United records the impaired loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, United records the impaired loan as nonrecurring Level 3.

Assets and Liabilities Not Measured at Fair Value

For financial instruments that have quoted market prices, those quotes are used to determine fair value. Financial instruments that have no defined maturity, have a remaining maturity of 180 days or less, or reprice frequently to a market rate, are assumed to have a fair value that approximates reported book value, after taking into consideration any applicable credit risk. If no market quotes are available, financial instruments are valued by discounting the expected cash flows using an estimated current market interest rate for the financial instrument. For off-balance sheet derivative instruments, fair value is estimated as the amount that United would receive or pay to terminate the contracts at the reporting date, taking into account the current unrealized gains or losses on open contracts.

Cash and cash equivalents and repurchase agreements have short maturities and therefore the carrying value approximates fair value. Due to the short-term settlement of accrued interest receivable and payable, the carrying amount closely approximates fair value.

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 estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include the mortgage banking operation, brokerage network, deferred income taxes, premises and equipment and goodwill. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Off-balance sheet instruments (commitments to extend credit and standby letters of credit) for which draws can be reasonably predicted are generally short-term in maturity and are priced at variable rates. Therefore, the estimated fair value associated with these instruments is immaterial.

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UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

The carrying amount and fair values as of the dates indicated for other financial instruments that are not measured at fair value on a recurring basis are as follows (in thousands).


				Fair Value Level											Fair Value Level
		Carrying Amount		Level 1		Level 2		Level 3		Total			Carrying Amount		Level 1		Level 2		Level 3		Total
March 31, 2022
March 31, 2023												March 31, 2023
Assets:	Assets:											Assets:
HTM debt securities	HTM debt securities	$	2,500,983	$	—	$	2,351,873	$	—	$	2,351,873	HTM debt securities	$	2,584,081	$	17,817	$	2,189,057	$	—	$	2,206,874
Loans and leases, net	Loans and leases, net	14,183,400		—		—		13,942,576		13,942,576		Loans and leases, net	16,948,169		—		—		16,291,834		16,291,834

Liabilities:	Liabilities:											Liabilities:
Deposits	Deposits	21,056,153		—		21,055,552		—		21,055,552		Deposits	22,004,674		—		22,010,264		—		22,010,264

FHLB advances												FHLB advances	30,000		—		29,998		—		29,998
Long-term debt	Long-term debt	324,230		—		—		337,839		337,839		Long-term debt	324,729		—		—		315,202		315,202

December 31, 2021
December 31, 2022												December 31, 2022
Assets:	Assets:											Assets:
HTM debt securities	HTM debt securities	$	1,156,098	$	—	$	1,148,804	$	—	$	1,148,804	HTM debt securities	$	2,613,648	$	17,417	$	2,173,656	$	—	$	2,191,073
Loans and leases, net	Loans and leases, net	11,657,814		—		—		11,607,821		11,607,821		Loans and leases, net	15,175,270		—		—		14,609,239		14,609,239

Liabilities:	Liabilities:											Liabilities:
Deposits	Deposits	18,241,179		—		18,239,934		—		18,239,934		Deposits	19,876,507		—		19,863,380		—		19,863,380

FHLB advances												FHLB advances	550,000		—		—		549,913		549,913
Long-term debt	Long-term debt	247,360		—		—		267,064		267,064		Long-term debt	324,663		—		—		313,380		313,380

Note 11 – Stock-Based Compensation

United has an equity compensation plan that allows for grants of various share-based compensation. The general terms of the plan include a vesting period (usually four years) with an exercisable period not to exceed ten years. Certain options and restricted stock unit awards provide for accelerated vesting if there is a change in control (as defined in the plan document). As of March 31, ~~2022, 495,861~~2023, 2.57 million additional awards could be granted under the plan.

The table below presents restricted stock unit and option activity for the three months ended March 31, ~~2022.~~2023.

Restricted Stock Unit Awards Options
Shares Weighted-
Average Grant-
Date Fair Value Aggregate
Intrinsic
Value ($000) Shares Weighted-
Average Exercise Price Weighted-
Average
Remaining
Contractual
Term (Years) Aggregate
Intrinsic
Value ($000)
Outstanding at December 31, 2021 808,474 $ 25.15 35,460 $ 8.38
Granted 74,115 33.25 48,239 20.88
Vested / Exercised (101,546) 24.79 $ 3,766 (13,797) 19.88 $ 240
Cancelled (18,109) 26.18 — —
Outstanding at March 31, 2022 762,934 25.97 26,550 69,902 14.73 3.5 1,403
Vested / Exercisable at March 31, 2022 — — 69,902 14.73 3.5 1,403


	Restricted Stock Unit Awards			Options
	Shares	Weighted- Average Grant- Date Fair Value		Aggregate Intrinsic Value ($000)		Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($000)
Outstanding at December 31, 2022	778,686	$	28.28			40,338	$	11.88
Granted	229,226	32.61				643,298	20.91
Released / Exercised	(104,300)	26.00		$	3,487	(64,956)	15.12			$	966

Cancelled	(10,633)	27.41				—	—
Outstanding at March 31, 2023	892,979	29.67		25,111		618,680	20.93		5.7	4,452

Vested / Exercisable at March 31, 2023	—	—				618,680	20.93		5.7	4,452

Options granted in ~~2022~~2023 reflect fully vested options assumed in the ~~Reliant~~Progress acquisition, with the weighted average exercise price of ~~Reliant’s~~Progress’ fully vested converted options determined pursuant to the purchase agreement. The value of the ~~Reliant~~Progress options was determined using a Black-Scholes model and was included in the purchase price for the acquisition. No compensation expense relating to options was included in earnings for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

Compensation expense for restricted stock units and performance stock units without market conditions is based on the market value of United’s common stock on the date of grant. Compensation expense for performance stock units with market conditions is based on ~~the grant date per share fair market value, which was estimated using the Monte Carlo Simulation valuation model. United recognizes~~

3233

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

the grant date per share fair value, which was estimated using the Monte Carlo Simulation valuation model. United recognizes the impact of forfeitures as they occur. The value of restricted stock unit and performance stock unit awards is amortized into expense over the service period.

For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, expense of ~~$2.39~~$2.36 million and ~~$1.41~~$2.39 million, respectively, was recognized related to restricted stock unit and performance stock unit awards granted to United employees, which was included in salaries and employee benefits expense. In addition, for ~~both~~ the three months ended March 31, 2023 and 2022, $122,000 and ~~2021,~~ $100,000, respectively, was recognized in other expense for restricted stock unit awards granted to members of United’s Board of Directors.

A deferred income tax benefit related to stock-based compensation expense of ~~$636,000~~$634,000 and ~~$385,000~~$636,000 was included in the determination of income tax expense for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. As of March 31, ~~2022,~~2023, there was ~~$15.1~~$21.6 million of unrecognized expense related to non-vested restricted stock unit and performance stock unit awards granted under the plan. That cost is expected to be recognized over a weighted-average period of ~~2.5~~2.6 years.

Note 12 – Reclassifications Out of AOCI

The following table presents the details regarding amounts reclassified out of AOCI for the periods indicated (in thousands). Amounts shown in parentheses reduce earnings.

Details about AOCI Components Three Months Ended
March 31, Affected Line Item in the Statement Where Net Income is Presented
2022 2021
Realized losses on AFS securities:
$ (3,734) $ — Securities losses, net
990 — Income tax benefit
$ (2,744) $ — Net of tax
Reclassifications related to derivative financial instruments accounted for as cash flow hedges:
Interest rate contracts $ (141) $ (144) Long-term debt interest expense
36 37 Income tax benefit
$ (105) $ (107) Net of tax
Reclassifications related to defined benefit pension plan activity:
Prior service cost $ (78) $ (117) Salaries and employee benefits expense
Actuarial losses (92) (144) Other expense
(170) (261) Total before tax
43 67 Income tax benefit
$ (127) $ (194) Net of tax
Total reclassifications for the period $ (2,976) $ (301) Net of tax



Details about AOCI Components	Three Months Ended March 31,			Affected Line Item in the Statement Where Net Income is Presented
		2023				2022
Realized losses on AFS securities:
		$	(1,644)	$	(3,734)		Securities losses, net
		374		990			Income tax (expense) benefit
		$	(1,270)	$	(2,744)		Net of tax

Amortization of unrealized losses on HTM securities transferred from AFS:
		$	(2,968)	$	—		Investment securities interest revenue
		720		—			Income tax benefit
		$	(2,248)	$	—		Net of tax

Reclassifications related to derivative instruments accounted for as cash flow hedges:
Interest rate contracts		$	822	$	(141)		Long-term debt interest expense

		(210)		36			Income tax benefit
		$	612	$	(105)		Net of tax




Amortization of defined benefit pension plan net periodic pension cost components:
Prior service cost		$	(61)	$	(78)		Salaries and employee benefits expense
Actuarial losses		—		(92)			Other expense

		(61)		(170)			Total before tax
		16		43			Income tax benefit
		$	(45)	$	(127)		Net of tax

Total reclassifications for the period		$	(2,951)	$	(2,976)		Net of tax

3334

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 13 – Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data).

Three Months Ended
March 31,
2022 2021
Net income $ 48,019 $ 73,706
Dividends on preferred stock (1,719) (1,719)
Earnings allocated to participating securities (238) (462)
Net income available to common shareholders $ 46,062 $ 71,525
Weighted average shares outstanding:
Basic 106,550 87,322
Effect of dilutive securities:
Stock options 46 —
Restricted stock units 81 144
Diluted 106,677 87,466
Net income per common share:
Basic $ 0.43 $ 0.82
Diluted $ 0.43 $ 0.82


	Three Months Ended March 31,
		2023		2022
Net income		$	62,300	$	48,019
Dividends on preferred stock		(1,719)		(1,719)
Earnings allocated to participating securities		(339)		(238)
Net income available to common shareholders		$	60,242	$	46,062

Weighted average shares outstanding:
Basic		115,451		106,550
Effect of dilutive securities:
Stock options		233		46
Restricted stock units		31		81
Diluted		115,715		106,677

Net income per common share:
Basic		$	0.52	$	0.43
Diluted		$	0.52	$	0.43

At March 31, ~~2022~~2023 and ~~2021,~~2022, United had no potentially dilutive instruments outstanding that were not included in the above analysis.

Note 14 – Regulatory Matters

As of March 31, ~~2022,~~2023, United and the Bank were categorized as well-capitalized under the regulatory ~~framework for prompt corrective action~~requirements in effect at ~~such~~that time. To be categorized as well-capitalized, United and the Bank must have exceeded the well-capitalized guideline ratios in effect at the time, as set forth in the table below, and have met certain other requirements. Management believes that United and the Bank exceeded all well-capitalized requirements at March 31, ~~2022,~~2023, and there have been no conditions or events since quarter-end that would change the status of well-capitalized.

Regulatory capital ratios at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, along with the minimum amounts required for capital adequacy purposes and to be well-capitalized under ~~prompt corrective action provisions~~regulatory requirements in effect at such times, are presented below for United and the Bank (dollars in thousands):


						United Community Banks, Inc. (Consolidated)						United Community Bank											United Community Banks, Inc. (Consolidated)						United Community Bank
		Minimum (1)		Well- Capitalized		March 31, 2022			December 31, 2021			March 31, 2022			December 31, 2021				Minimum (1)		Well- Capitalized		March 31, 2023			December 31, 2022			March 31, 2023			December 31, 2022
Risk-based ratios:	Risk-based ratios:																	Risk-based ratios:
CET1 capital	CET1 capital	4.5	%	6.5	%	11.88		%	12.46		%	12.77		%	12.87		%	CET1 capital	4.5	%	6.5	%	12.08		%	12.26		%	12.43		%	12.83		%
Tier 1 capital	Tier 1 capital	6.0		8.0		12.46			13.17			12.77			12.87			Tier 1 capital	6.0		8.0		12.58			12.81			12.43			12.83
Total capital	Total capital	8.0		10.0		14.34			14.65			13.48			13.46			Total capital	8.0		10.0		14.40			14.79			13.34			13.70
Leverage ratio	Leverage ratio	4.0		5.0		8.89			8.75			9.09			8.53			Leverage ratio	4.0		5.0		9.65			9.69			9.54			9.69

CET1 capital	CET1 capital					$	1,991,401		$	1,688,176		$	2,131,904		$	1,738,557		CET1 capital					$	2,323,412		$	2,164,211		$	2,380,709		$	2,255,337
Tier 1 capital	Tier 1 capital					2,087,823			1,784,598			2,131,904			1,738,557			Tier 1 capital					2,419,834			2,260,633			2,380,709			2,255,337
Total capital	Total capital					2,402,996			1,984,376			2,250,777			1,818,335			Total capital					2,768,855			2,610,216			2,553,799			2,408,895
Risk-weighted assets	Risk-weighted assets					16,756,444			13,548,534			16,697,110			13,512,405			Risk-weighted assets					19,231,410			17,648,573			19,148,302			17,583,347
Average total assets for the leverage ratio	Average total assets for the leverage ratio					23,485,581			20,402,842			23,443,019			20,377,319			Average total assets for the leverage ratio					25,086,615			23,322,018			24,946,089			23,285,253

(1) As of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 the additional capital conservation buffer in effect was 2.50%

3435

UNITED COMMUNITY BANKS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 15 – Commitments and Contingencies

United is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The contract amounts of these instruments reflect the extent of involvement United has in particular classes of financial instruments. The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. United uses the same credit policies in making commitments and conditional obligations as it uses for underwriting on-balance sheet instruments. In most cases, collateral or other security is required to support financial instruments with credit risk.

The following table summarizes the contractual amount of off-balance sheet instruments as of the dates indicated (in thousands).

March 31, 2022 December 31, 2021
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit $ 4,355,305 $ 3,591,975
Letters of credit 57,834 29,312

United holds minor investments in certain limited partnerships for Community Reinvestment Act purposes. As of March 31, 2022 and December 31, 2021, the Bank had a recorded investment of $59.0 million and $52.7 million, respectively, in these limited partnerships, which is included in other assets on the consolidated balance sheet. As of March 31, 2022, United had committed to fund an additional $18.0 million related to future capital calls that are not reflected in the consolidated balance sheet.


	March 31, 2023		December 31, 2022
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	4,881,934	$	4,683,790
Letters of credit	58,947		46,896

As of March 31, 2022, the Holding Company also had $19.9 million in commitments for future capital calls to fintech fund limited partnerships that have not been reflected in the consolidated balance sheet.

United, in the normal course of business, is subject to various pending and threatened lawsuits in which claims for monetary damages are asserted. Although it is not possible to predict the outcome of these lawsuits, or the range of any possible loss, management, after consultation with legal counsel, does not anticipate that the ultimate aggregate liability, if any, arising from these lawsuits will have a material adverse effect on United’s financial position or results of operations.

Tax Credit and Certain Equity Investments

~~Note 16 - Subsequent Events~~United invests in certain LIHTC partnerships throughout its market area as a means of supporting local communities, as well as in entities that promote renewable energy sources. United receives tax credits related to these investments. For certain of the investments, United provides financing during the construction and development phase of the related projects and/or permanent financing upon completion of the project. United has concluded that these partnerships are VIEs of which it is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the VIEs' financial performance and, therefore, is not required to consolidate these VIEs. United's maximum potential exposure to losses relative to investments in these VIEs is generally limited to the sum of the outstanding investment balance, any future funding commitments and the balance of any related loans to the entity. Loans to these entities are underwritten in substantially the same manner as other loans and are generally secured.

~~Announced Acquisition~~United also has investments in and future funding commitments related to fintech fund limited partnerships, other community development entities and certain other equity method investments. United has concluded that these partnerships are VIEs of ~~Progress~~

~~On May 4, 2022,~~which it is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the VIEs' financial performance and, therefore, is not required to consolidate these VIEs. The risk exposure relating to such commitments is generally limited to the amount invested by United ~~announced an agreement to acquire Progress Financial Corporation~~ and its wholly-owned subsidiary, Progress Bank & Trust, collectively referred to as “Progress”. Progress is headquartered in Huntsville, Alabama, and operates 14 offices in high-growth, southeastern markets, including, Huntsville, Birmingham, Daphne and Tuscaloosa in Alabama and the Florida Panhandle. As of March 31, 2022, Progress had total assets of $1.86 billion, total loans of $1.27 billion, and total deposits of $1.67 billion. In addition to traditional banking products, Progress offers wealth management and private banking through Progress Financial Services with approximately $1.22 billion in assets under management. The merger, which is subject to regulatory approval, the approval of Progress shareholders, and other customary conditions, is expected to close in the fourth quarter of 2022.any future funding commitments.

The following table summarizes, as of the dates indicated, tax credit and certain equity method investments (in thousands):


	Balance Sheet Location	March 31, 2023		December 31, 2022
Investments in LIHTC:
Carrying amount	Other assets	$	53,867	$	50,054
Amount of future funding commitments included in carrying amount	Other liabilities	17,366		18,090
Renewable energy investments:
Carrying amount	Other assets	39,221		19,617
Amount of future funding commitments included in carrying amount	Other liabilities	37,406		18,781
Fintech funds and certain other equity method investments:
Carrying amount	Other assets	30,184		27,569
Amount of future funding commitments included in carrying amount	Other liabilities	470		470
Amount of future funding commitments not included in carrying amount	N/A	22,811		23,690

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our financial condition at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 and our results of operations for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022. The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from our consolidated financial statements and is intended to provide insight into our results of operations and financial condition. The following discussion and analysis should be read along with our consolidated financial statements and related notes included in Part I - Item 1 of this Report, “Cautionary Note Regarding Forward-Looking Statements” and the risk factors discussed in our ~~2021~~2022 10-K, and the other reports we have filed with the SEC after we filed the ~~2021~~2022 10-K.

Unless the context otherwise requires, the terms “we,” “our,” “us” refer to United on a consolidated basis.

Overview

We offer a wide array of commercial and consumer banking services and investment advisory services through a ~~198~~207 branch network throughout Georgia, South Carolina, North Carolina, Tennessee, Florida and ~~Florida.~~Alabama. We have grown organically as well as through strategic acquisitions. At March 31, ~~2022,~~2023, we had consolidated total assets of ~~$24.4~~$25.9 billion and ~~2,893~~3,052 full-time equivalent employees.

Recent Developments

Mergers and Acquisitions

~~Since March 31, 2021 we have continued to expand through acquisitions as follows:~~

•On January ~~1, 2022,~~3, 2023, we completed the acquisition of ~~Reliant,~~Progress, which ~~was headquartered~~operated 13 offices primarily located in ~~Brentwood, Tennessee, a suburb of Nashville, Tennessee,~~Alabama and ~~operated a 25-branch network in Tennessee.~~the Florida Panhandle. We acquired ~~$2.96~~$1.90 billion of assets and assumed ~~$2.66~~$1.60 billion of liabilities in the acquisition, which included ~~$2.32~~$1.44 billion in loans and ~~$2.50~~$1.33 billion in deposits.

•On ~~October 1, 2021,~~February 13, 2023, we ~~acquired Aquesta, a bank~~announced an agreement to acquire First Miami, which we plan to complete in the third quarter of 2023. First Miami is headquartered in ~~Cornelius, North Carolina which operated a network of branches primarily located~~South Miami, Florida, and operates 3 offices in the ~~Charlotte~~Miami metropolitan area. ~~We acquired~~As of March 31, 2023, First Miami had total assets of ~~$756~~$986 million, ~~including $498~~total loans of $606 million, and total deposits of $822 million. In addition to traditional banking products, First Miami offers private banking, trust and wealth management with approximately $320 million in ~~loans, and we assumed $658 million in deposits as of the acquisition date.~~assets under administration.

•On July 6, 2021, we acquired FinTrust, an investment advisory firm headquartered in Greenville, South Carolina, with additional locations in Anderson, South Carolina, and Athens and Macon, Georgia. The firm provides wealth and investment management services to individuals and institutions within its markets, which expanded our Wealth Management division.

Results of Operations

We reported net income and diluted earnings per common share of ~~$48.0~~$62.3 million and ~~$0.43,~~$0.52, respectively, for the first quarter of ~~2022.~~2023. This compared to net income and diluted earnings per common share of ~~$73.7~~$48.0 million and ~~$0.82,~~$0.43, respectively, for the same period in ~~2021.~~2022.

We reported net income - operating (non-GAAP) of ~~$55.1~~$69.0 million for the first quarter of ~~2022,~~2023, compared to ~~$74.9~~$55.1 million for the same period in ~~2021.~~2022. For the first quarters of ~~2022~~2023 and ~~2021,~~2022, net income - operating (non-GAAP) excludes merger-related and other charges, which net of tax, totaled ~~$7.05~~$6.68 million and ~~$1.21~~$7.05 million, respectively.

Net interest revenue increased to $211 million for the first quarter of 2023, compared to $164 million for the first quarter of ~~2022, compared to $132 million for the first quarter of 2021,~~2022. The increase was due to several factors including loan growth, ~~mostly~~both organic and from the ~~acquisitions~~acquisition of ~~Reliant~~Progress, and ~~Aquesta~~higher interest rates earned on our average loan and securities portfolios. The increase in interest revenue was partially offset by higher rates paid on deposits, a ~~more~~less favorable deposit mix ~~comprised~~and utilization of wholesale borrowings, which are more ~~heavily of lower-cost transaction~~costly than customer deposits. The net interest margin ~~decreased~~increased to ~~2.97%~~3.61% for the three months ended March 31, ~~2022~~2023 from ~~3.22%~~2.97% for the same period in ~~2021~~2022 primarily due to the effect of the ~~low~~rising interest rate environment on our asset sensitive balance sheet.

We recorded a provision for credit losses of $21.8 million and $23.1 million for the first ~~quarter~~quarters of 2023 and 2022, ~~compared to a release of provision of $12.3 million~~respectively. Provision expense for the first ~~quarter~~quarters of ~~2021. The provision~~2023 and 2022 included initial provisions for credit losses ~~during the first quarter of 2022 included the initial provision for credit losses~~ on ~~Reliant’s~~ non-PCD loans and unfunded commitments ~~totaling~~acquired from Progress and Reliant of $10.4 million and $18.3 ~~million. The negative provision in 2021 resulted from a downward adjustment to the ACL, reflecting a combination of the Bank’s own credit trends and an improving economic forecast.~~million, respectively. We recognized higher net charge-offs for the first quarter of ~~2022~~2023 of ~~$2.98~~$7.08 million compared to ~~net recoveries of $305,000~~$2.98 million for the same period in ~~2021.~~2022, which partially offset the decrease in acquisition-related provision for credit losses for the first quarter of 2023.

Noninterest income of ~~$39.0~~$30.2 million for the first quarter of ~~2022~~2023 was down ~~$5.73~~$8.76 million, or ~~13%~~22%, from the first quarter of ~~2021. The primary drivers of~~2022, primarily driven by the ~~decrease were a $6.42~~$11.6 million decrease in mortgage loan gains and related fees due to lower mortgage production in the current rising interest rate environment. The decrease in mortgage income was partially offset by an increase in lending and loan servicing fees, lower securities losses and gains on other investments compared to losses in the same period of ~~$3.73~~2022.

3637

~~million. These decreases were partially offset by increases in wealth management fees, service charges and fees and gains on sales of other loans.~~

For the first quarter of ~~2022,~~2023, noninterest expenses of ~~$119~~$140 million increased ~~$24.1~~$20.5 million, or ~~25%~~17%, compared to the same period of ~~2021.~~2022. The increase was primarily attributable to a ~~$10.4~~$7.69 million increase in salaries and employee benefits, mostly driven by ~~acquisitions since~~ the ~~first quarter~~addition of ~~2021, and a $7.47 million increase in merger-related and other charges primarily related~~Progress employees. Other contributors to the ~~acquisition~~increase included increases in FDIC assessment expense and amortization of ~~Reliant.~~intangibles, which was driven by the addition of the Progress core deposit intangible.

Critical Accounting Estimates

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Our accounting and reporting estimates are in accordance with GAAP and conform to general practices within the banking industry. Estimates that are susceptible to significant changes include accounting for the ACL and fair value measurements, both of which require significant judgments by management. Actual results could differ significantly from those estimates. Also, different assumptions in the application of these accounting estimates could result in material changes in our consolidated financial position or consolidated results of operations. Our critical accounting estimates are discussed in MD&A in our ~~2021~~2022 10-K. ~~There have been no material changes to our critical accounting estimates in 2022.~~

Non-GAAP Reconciliation and Explanation

This Report contains financial information determined by methods other than in accordance with GAAP. Such non-GAAP financial information includes the following measures: “tangible book value per common share,” and “tangible common equity to tangible assets.” In addition, management presents non-GAAP operating performance measures, which exclude merger-related and other items that are not part of our ongoing business operations. Operating performance measures include “expenses – 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.” We have developed internal policies 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. We use these non-GAAP measures because we believe they provide useful supplemental information for evaluating our operations and performance over periods of time, as well as in managing and evaluating our business and in discussions about our operations and performance. We believe these non-GAAP measures may also provide users of our financial information with a meaningful measure for assessing our financial results and credit trends, as well as a comparison to financial results for prior periods. Nevertheless, non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. These non-GAAP measures should be viewed in addition to, and not as an alternative to or substitute for, measures determined in accordance with GAAP. In addition, because non-GAAP measures are not standardized, it may not be possible to compare our non-GAAP measures to similarly titled measures used by other companies. To the extent applicable, reconciliations of these non-GAAP measures to the most directly comparable measures as reported in accordance with GAAP are included in Table 1 of MD&A.

3738


UNITED COMMUNITY BANKS, INC.	UNITED COMMUNITY BANKS, INC.																			UNITED COMMUNITY BANKS, INC.
Table 1 - Financial Highlights	Table 1 - Financial Highlights																			Table 1 - Financial Highlights

(in thousands, except per share data)	(in thousands, except per share data)																			(in thousands, except per share data)
		2022			2021												First Quarter 2022 - 2021 Change		2023			2022																First Quarter 2023 - 2022 Change
		First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter							First Quarter				Fourth Quarter				Third Quarter				Second Quarter				First Quarter				First Quarter 2023 - 2022 Change
INCOME SUMMARY	INCOME SUMMARY																			INCOME SUMMARY
Interest revenue	Interest revenue	$	171,059		$	143,768		$	147,675		$	145,809		$	141,542					Interest revenue		$	279,487			$	240,831			$	213,887			$	187,378			$	171,059
Interest expense	Interest expense	7,267			6,213			6,636			7,433			9,478						Interest expense		68,017				30,943				14,113				8,475				7,267
Net interest revenue	Net interest revenue	163,792			137,555			141,039			138,376			132,064			24	%		Net interest revenue		211,470				209,888				199,774				178,903				163,792				29	%
Provision for (release of) credit losses		23,086			(647)			(11,034)			(13,588)			(12,281)
Provision for credit losses																				Provision for credit losses		21,783				19,831				15,392				5,604				23,086
Noninterest income	Noninterest income	38,973			37,177			40,095			35,841			44,705			(13)			Noninterest income		30,209				33,354				31,922				33,458				38,973				(22)
Total revenue	Total revenue	179,679			175,379			192,168			187,805			189,050			(5)			Total revenue		219,896				223,411				216,304				206,757				179,679				22
Noninterest expenses	Noninterest expenses	119,275			109,156			96,749			95,540			95,194			25			Noninterest expenses		139,805				117,329				112,755				120,790				119,275				17
Income before income tax expense	Income before income tax expense	60,404			66,223			95,419			92,265			93,856			(36)			Income before income tax expense		80,091				106,082				103,549				85,967				60,404				33
Income tax expense	Income tax expense	12,385			14,204			21,603			22,005			20,150			(39)			Income tax expense		17,791				24,632				22,388				19,125				12,385				44
Net income	Net income	48,019			52,019			73,816			70,260			73,706			(35)			Net income		62,300				81,450				81,161				66,842				48,019				30
Merger-related and other charges	Merger-related and other charges	9,016			9,912			1,437			1,078			1,543						Merger-related and other charges		8,631				1,470				1,746				7,143				9,016
Income tax benefit of merger-related and other charges	Income tax benefit of merger-related and other charges	(1,963)			(2,265)			(328)			(246)			(335)						Income tax benefit of merger-related and other charges		(1,955)				(323)				(385)				(1,575)				(1,963)

Net income - operating (1)	Net income - operating (1)	$	55,072		$	59,666		$	74,925		$	71,092		$	74,914		(26)			Net income - operating (1)		$	68,976			$	82,597			$	82,522			$	72,410			$	55,072			25

PERFORMANCE MEASURES	PERFORMANCE MEASURES																			PERFORMANCE MEASURES
Per common share:	Per common share:																			Per common share:
Diluted net income - GAAP	Diluted net income - GAAP	$	0.43		$	0.55		$	0.82		$	0.78		$	0.82		(48)			Diluted net income - GAAP		$	0.52			$	0.74			$	0.74			$	0.61			$	0.43			21
Diluted net income - operating (1)	Diluted net income - operating (1)	0.50			0.64			0.83			0.79			0.83			(40)			Diluted net income - operating (1)		0.58				0.75				0.75				0.66				0.50				16
Cash dividends declared	Cash dividends declared	0.21			0.20			0.20			0.19			0.19			11			Cash dividends declared		0.23				0.22				0.22				0.21				0.21				10
Book value	Book value	24.38			23.63			23.25			22.81			22.15			10			Book value		25.76				24.38				23.78				23.96				24.38				6
Tangible book value (3)	Tangible book value (3)	17.08			18.42			18.68			18.49			17.83			(4)			Tangible book value (3)		17.59				17.13				16.52				16.68				17.08				3
Key performance ratios:	Key performance ratios:																			Key performance ratios:
Return on common equity - GAAP (2)(4)	Return on common equity - GAAP (2)(4)	6.80		%	9.32		%	14.26		%	14.08		%	15.37		%				Return on common equity - GAAP (2)(4)		7.34		%		10.86		%		11.02		%		9.31		%		6.80		%
Return on common equity - operating (1)(2)(4)	Return on common equity - operating (1)(2)(4)	7.83			10.74			14.48			14.25			15.63						Return on common equity - operating (1)(2)(4)		8.15				11.01				11.21				10.10				7.83
Return on tangible common equity - operating (1)(2)(3)(4)	Return on tangible common equity - operating (1)(2)(3)(4)	11.00			13.93			18.23			17.81			19.68						Return on tangible common equity - operating (1)(2)(3)(4)		11.63				15.20				15.60				14.20				11.00
Return on assets - GAAP (4)	Return on assets - GAAP (4)	0.78			0.96			1.48			1.46			1.62						Return on assets - GAAP (4)		0.95				1.33				1.32				1.08				0.78
Return on assets - operating (1)(4)	Return on assets - operating (1)(4)	0.89			1.10			1.50			1.48			1.65						Return on assets - operating (1)(4)		1.06				1.35				1.34				1.17				0.89
Net interest margin (FTE) (4)	Net interest margin (FTE) (4)	2.97			2.81			3.12			3.19			3.22						Net interest margin (FTE) (4)		3.61				3.76				3.57				3.19				2.97
Efficiency ratio - GAAP	Efficiency ratio - GAAP	57.43			62.12			53.11			54.53			53.55						Efficiency ratio - GAAP		57.20				47.95				48.41				56.58				57.43
Efficiency ratio - operating (1)	Efficiency ratio - operating (1)	53.09			56.48			52.33			53.92			52.68						Efficiency ratio - operating (1)		53.67				47.35				47.66				53.23				53.09
Equity to total assets	Equity to total assets	11.06			10.61			10.89			11.04			10.95						Equity to total assets		11.90				11.25				11.12				10.95				11.06

Tangible common equity to tangible assets (3)	Tangible common equity to tangible assets (3)	7.72			8.09			8.53			8.71			8.57						Tangible common equity to tangible assets (3)		8.17				7.88				7.70				7.59				7.72

ASSET QUALITY	ASSET QUALITY																			ASSET QUALITY

NPAs	NPAs	$	40,816		$	32,855		$	45,335		$	46,347		$	56,496		(28)			NPAs		$	73,403			$	44,281			$	35,511			$	34,428			$	40,816			80
ACL - loans	ACL - loans	132,805			102,532			99,620			111,616			126,866			5			ACL - loans		176,534				159,357				148,502				136,925				132,805				33

Net charge-offs		2,978			248			551			(456)			(305)
Net charge-offs (recoveries)																				Net charge-offs (recoveries)		7,084				6,611				1,134				(1,069)				2,978
ACL - loans to loans	ACL - loans to loans	0.93		%	0.87		%	0.89		%	0.98		%	1.09		%				ACL - loans to loans		1.03		%		1.04		%		1.00		%		0.94		%		0.93		%

Net charge-offs to average loans (4)	Net charge-offs to average loans (4)	0.08			0.01			0.02			(0.02)			(0.01)						Net charge-offs to average loans (4)		0.17				0.17				0.03				(0.03)				0.08
NPAs to total assets	NPAs to total assets	0.17			0.16			0.23			0.25			0.30						NPAs to total assets		0.28				0.18				0.15				0.14				0.17

AT PERIOD END ($ in millions)	AT PERIOD END ($ in millions)																			AT PERIOD END ($ in millions)
Loans	Loans	$	14,316		$	11,760		$	11,191		$	11,391		$	11,679		23			Loans		$	17,125			$	15,335			$	14,882			$	14,541			$	14,316			20
Investment securities	Investment securities	6,410			5,653			5,335			4,928			4,332			48			Investment securities		5,915				6,228				6,539				6,683				6,410				(8)
Total assets	Total assets	24,374			20,947			19,481			18,896			18,557			31			Total assets		25,872				24,009				23,688				24,213				24,374				6
Deposits	Deposits	21,056			18,241			16,865			16,328			15,993			32			Deposits		22,005				19,877				20,321				20,873				21,056				5
Shareholders’ equity	Shareholders’ equity	2,695			2,222			2,122			2,086			2,031			33			Shareholders’ equity		3,078				2,701				2,635				2,651				2,695				14
Common shares outstanding (thousands)	Common shares outstanding (thousands)	106,025			89,350			86,559			86,665			86,777			22			Common shares outstanding (thousands)		115,152				106,223				106,163				106,034				106,025				9

(1) Excludes merger-related and other charges. (2) Net income less preferred stock dividends, divided by average realized common equity, which excludes AOCI. (3) Excludes effect of acquisition related intangibles and associated amortization. (4) Annualized.

3839

UNITED COMMUNITY BANKS, INC.
Table 1 (Continued) - Financial Highlights
Non-GAAP Performance Measures Reconciliation
(in thousands, except per share data)
2022 2021
First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter
Noninterest expense reconciliation
Noninterest expenses (GAAP) $ 119,275 $ 109,156 $ 96,749 $ 95,540 $ 95,194
Merger-related and other charges (9,016) (9,912) (1,437) (1,078) (1,543)
Noninterest expenses - operating $ 110,259 $ 99,244 $ 95,312 $ 94,462 $ 93,651
Net income reconciliation
Net income (GAAP) $ 48,019 $ 52,019 $ 73,816 $ 70,260 $ 73,706
Merger-related and other charges 9,016 9,912 1,437 1,078 1,543
Income tax benefit of merger-related and other charges (1,963) (2,265) (328) (246) (335)
Net income - operating $ 55,072 $ 59,666 $ 74,925 $ 71,092 $ 74,914
Diluted income per common share reconciliation
Diluted income per common share (GAAP) $ 0.43 $ 0.55 $ 0.82 $ 0.78 $ 0.82
Merger-related and other charges, net of tax 0.07 0.09 0.01 0.01 0.01
Diluted income per common share - operating $ 0.50 $ 0.64 $ 0.83 $ 0.79 $ 0.83
Book value per common share reconciliation
Book value per common share (GAAP) $ 24.38 $ 23.63 $ 23.25 $ 22.81 $ 22.15
Effect of goodwill and other intangibles (7.30) (5.21) (4.57) (4.32) (4.32)
Tangible book value per common share $ 17.08 $ 18.42 $ 18.68 $ 18.49 $ 17.83
Return on tangible common equity reconciliation
Return on common equity (GAAP) 6.80 % 9.32 % 14.26 % 14.08 % 15.37 %
Merger-related and other charges, net of tax 1.03 1.42 0.22 0.17 0.26
Return on common equity - operating 7.83 10.74 14.48 14.25 15.63
Effect of goodwill and other intangibles 3.17 3.19 3.75 3.56 4.05
Return on tangible common equity - operating 11.00 % 13.93 % 18.23 % 17.81 % 19.68 %
Return on assets reconciliation
Return on assets (GAAP) 0.78 % 0.96 % 1.48 % 1.46 % 1.62 %
Merger-related and other charges, net of tax 0.11 0.14 0.02 0.02 0.03
Return on assets - operating 0.89 % 1.10 % 1.50 % 1.48 % 1.65 %
Efficiency ratio reconciliation
Efficiency ratio (GAAP) 57.43 % 62.12 % 53.11 % 54.53 % 53.55 %
Merger-related and other charges (4.34) (5.64) (0.78) (0.61) (0.87)
Efficiency ratio - operating 53.09 % 56.48 % 52.33 % 53.92 % 52.68 %
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP) 11.06 % 10.61 % 10.89 % 11.04 % 10.95 %
Effect of goodwill and other intangibles (2.94) (2.06) (1.87) (1.82) (1.86)
Effect of preferred equity (0.40) (0.46) (0.49) (0.51) (0.52)
Tangible common equity to tangible assets 7.72 % 8.09 % 8.53 % 8.71 % 8.57 %


UNITED COMMUNITY BANKS, INC.
Table 1 (Continued) - Financial Highlights
Non-GAAP Performance Measures Reconciliation
(in thousands, except per share data)
	2023			2022
	First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
Noninterest expense reconciliation
Noninterest expenses (GAAP)	$	139,805		$	117,329		$	112,755		$	120,790		$	119,275
Merger-related and other charges	(8,631)			(1,470)			(1,746)			(7,143)			(9,016)
Noninterest expenses - operating	$	131,174		$	115,859		$	111,009		$	113,647		$	110,259

Net income reconciliation
Net income (GAAP)	$	62,300		$	81,450		$	81,161		$	66,842		$	48,019
Merger-related and other charges	8,631			1,470			1,746			7,143			9,016
Income tax benefit of merger-related and other charges	(1,955)			(323)			(385)			(1,575)			(1,963)


Net income - operating	$	68,976		$	82,597		$	82,522		$	72,410		$	55,072

Diluted income per common share reconciliation
Diluted income per common share (GAAP)	$	0.52		$	0.74		$	0.74		$	0.61		$	0.43
Merger-related and other charges, net of tax	0.06			0.01			0.01			0.05			0.07


Diluted income per common share - operating	$	0.58		$	0.75		$	0.75		$	0.66		$	0.50

Book value per common share reconciliation
Book value per common share (GAAP)	$	25.76		$	24.38		$	23.78		$	23.96		$	24.38
Effect of goodwill and other intangibles	(8.17)			(7.25)			(7.26)			(7.28)			(7.30)
Tangible book value per common share	$	17.59		$	17.13		$	16.52		$	16.68		$	17.08

Return on tangible common equity reconciliation
Return on common equity (GAAP)	7.34		%	10.86		%	11.02		%	9.31		%	6.80		%
Merger-related and other charges, net of tax	0.81			0.15			0.19			0.79			1.03


Return on common equity - operating	8.15			11.01			11.21			10.10			7.83
Effect of goodwill and other intangibles	3.48			4.19			4.39			4.10			3.17
Return on tangible common equity - operating	11.63		%	15.20		%	15.60		%	14.20		%	11.00		%

Return on assets reconciliation
Return on assets (GAAP)	0.95		%	1.33		%	1.32		%	1.08		%	0.78		%
Merger-related and other charges, net of tax	0.11			0.02			0.02			0.09			0.11


Return on assets - operating	1.06		%	1.35		%	1.34		%	1.17		%	0.89		%

Efficiency ratio reconciliation
Efficiency ratio (GAAP)	57.20		%	47.95		%	48.41		%	56.58		%	57.43		%
Merger-related and other charges	(3.53)			(0.60)			(0.75)			(3.35)			(4.34)
Efficiency ratio - operating	53.67		%	47.35		%	47.66		%	53.23		%	53.09		%

Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP)	11.90		%	11.25		%	11.12		%	10.95		%	11.06		%
Effect of goodwill and other intangibles	(3.36)			(2.97)			(3.01)			(2.96)			(2.94)

Effect of preferred equity	(0.37)			(0.40)			(0.41)			(0.40)			(0.40)
Tangible common equity to tangible assets	8.17		%	7.88		%	7.70		%	7.59		%	7.72		%

3940

Net Interest Revenue

Net interest revenue, which is the difference between the interest earned on assets and the interest paid on deposits and borrowed funds, is the single largest component of total revenue. Management seeks to optimize this revenue while balancing interest rate, credit and liquidity risks.

The banking industry generally uses two ratios to measure the relative profitability of net interest revenue. The net interest spread measures the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities. The interest rate spread eliminates the effect of noninterest-bearing deposits and shareholders’ equity and gives a direct perspective on the effect of market interest rate movements. The net interest margin is an indication of the profitability of a company’s balance sheet and is defined as net interest revenue as a percent of average total interest-earning assets, which includes the positive effect of funding a portion of interest-earning assets with noninterest-bearing deposits and shareholders’ equity.

Net interest revenue for the first quarters of 2023 and 2022 ~~and 2021~~ was ~~$164~~$211 million and ~~$132~~$164 million, respectively. FTE net interest revenue for the first quarter of ~~2022~~2023 was ~~$165~~$213 million, representing an increase of ~~$31.9~~$47.6 million, or ~~24%~~29%, from the same period in ~~2021.~~2022. The net interest ~~spread~~spreads for the first quarters of 2023 and 2022 were 2.87% and ~~2021 was~~ 2.88% ~~and 3.06%~~, respectively. The net interest ~~margin~~margins for the first quarters of 2023 and 2022 were 3.61% and ~~2021 was~~ 2.97% ~~and 3.22%~~, respectively. Table 2 shows the relationship between interest revenue and expense and the average amounts of assets and liabilities, which provides further insight into net interest spread and net interest margin for the periods indicated. The following discussion provides additional detail on the average balances and net interest revenue for the first quarters of ~~2022~~2023 and ~~2021.~~2022.

The increase in FTE net interest revenue was primarily driven by the ~~$2.80~~$2.66 billion increase in average loans provided by the addition of the ~~Aquesta and Reliant~~Progress loan ~~portfolios~~portfolio as well as organic growth since the first quarter of ~~2021.~~2022. As a result, loan interest revenue increased ~~$21.5~~$89.9 million compared to the first quarter of ~~2021,~~2022, which ~~was partially offset by the impact of $10.1~~included a $1.75 million ~~less in PPP interest and fee income, and $2.00 million less~~increase in purchased loan accretion. The increase in loan interest reflects interest revenue on approximately $1.44 billion in loans from the Progress acquisition and higher interest rates. The FOMC raised the targeted federal funds rate a total of 475 basis points beginning March 17, 2022 through the first quarter of 2023. Rising interest rates lifted the yield on the loan portfolio by 150 basis points to 5.68% in the first quarter of 2023 compared with the same period a year ago. Additionally, the $122 million increase in the daily average balance of securities and the 97 basis point increase in the average portfolio yield provided ~~$8.39~~$16.1 million more in FTE interest revenue compared to the same period of last ~~year as we have continued~~year.

The daily average balance of interest-bearing deposits increased by $644 million, which includes approximately $907 million of interest-bearing deposits received in the acquisition of Progress, partially offset by attrition of excess customer deposit balances that had built up during the COVID 19 pandemic. This decline in the daily average balance of deposits led us to ~~deploy surplus liquidity into the securities portfolio. Compared~~use wholesale funding sources to fund loan growth. In the first quarter of ~~2021,~~2023, we ~~grew~~had FHLB advances and repurchase agreements outstanding with a total daily average ~~interest-bearing deposits by $3.28 billion, which includes deposits received~~balance of $561 million resulting in additional interest expense of $6.26 million compared with $611,000 of daily average balances outstanding in the ~~acquisitions~~first quarter of ~~Aquesta and Reliant and organic growth. The impact of interest-bearing deposit growth~~2022. This change in funding mix toward more costly wholesale borrowings, combined with higher rates offered on customer deposits, led to a $60.8 million increase in interest expense from the first quarter of 2022. We also saw attrition in our noninterest-bearing deposit balances as rising interest rates offered customers more attractive alternatives. Although the daily average balance of our noninterest-bearing deposits was ~~more than offset by our ability to further reduce deposit rates in the low interest rate environment. As a result, we recognized $2.09~~up $31.2 million ~~less in deposit interest expense during~~from the first quarter of 2022, ~~compared to~~ the ~~same period~~acquisition of ~~2021. We also benefited from a more favorable~~Progress added approximately $427 million in noninterest-bearing deposits. The attrition of deposit ~~mix as more~~balances, which began soon after the the FOMC began increasing the targeted Federal Funds rate at the end of ~~our interest-bearing deposits resided in lower-cost transaction deposit accounts.~~

~~During~~ the first quarter of 2022, ~~our interest-earning assets were more heavily comprised of investment securities compared~~appears to have ceased in the ~~same~~first quarter of ~~2021, which resulted in net interest margin and spread compression. In addition, the continuation~~2023 with March 31, 2023 customer deposit balances up at an annualized rate of ~~the historically low interest rate environment negatively impacted our asset sensitive balance sheet and contributed to the net interest margin compression.~~10% from December 31, 2022, excluding Progress.

4041


Table 2 - Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended March 31,
(dollars in thousands, FTE)


		2022						2021							2023						2022
		Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate			Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
Assets:	Assets:													Assets:
Interest-earning assets:	Interest-earning assets:													Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)	Loans, net of unearned income (FTE) (1)(2)	$	14,234,026	$	146,637	4.18	%	$	11,432,908	$	125,122	4.44	%	Loans, net of unearned income (FTE) (1)(2)	$	16,897,372	$	236,530	5.68	%	$	14,234,026	$	146,637	4.18	%
Taxable securities (3)	Taxable securities (3)	5,848,976		21,010		1.44		3,686,405		13,298		1.44		Taxable securities (3)	6,059,323		37,876		2.50		5,848,976		21,010		1.44
Tax-exempt securities (FTE) (1)(3)	Tax-exempt securities (FTE) (1)(3)	510,954		3,566		2.79		304,983		2,888		3.79		Tax-exempt securities (FTE) (1)(3)	422,583		2,834		2.68		510,954		3,566		2.79
Federal funds sold and other interest-earning assets	Federal funds sold and other interest-earning assets	1,910,411		1,020		0.22		1,357,890		1,222		0.36		Federal funds sold and other interest-earning assets	472,325		3,352		2.88		1,910,411		1,020		0.22
Total interest-earning assets (FTE)	Total interest-earning assets (FTE)	22,504,367		172,233		3.10		16,782,186		142,530		3.44		Total interest-earning assets (FTE)	23,851,603		280,592		4.76		22,504,367		172,233		3.10

Noninterest-earning assets:	Noninterest-earning assets:													Noninterest-earning assets:
Allowance for credit losses	Allowance for credit losses	(113,254)						(143,703)						Allowance for credit losses	(167,584)						(113,254)
Cash and due from banks	Cash and due from banks	166,005						140,292						Cash and due from banks	271,210						166,005
Premises and equipment	Premises and equipment	277,216						221,411						Premises and equipment	329,135						277,216
Other assets (3)	Other assets (3)	1,369,301						1,023,275						Other assets (3)	1,484,936						1,369,301
Total assets	Total assets	$	24,203,635					$	18,023,461					Total assets	$	25,769,300					$	24,203,635

Liabilities and Shareholders' Equity:	Liabilities and Shareholders' Equity:													Liabilities and Shareholders' Equity:
Interest-bearing liabilities:	Interest-bearing liabilities:													Interest-bearing liabilities:
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
NOW and interest-bearing demand	NOW and interest-bearing demand	$	4,667,098	1,469		0.13		$	3,331,043	1,486		0.18		NOW and interest-bearing demand	$	4,499,907	17,599		1.59		$	4,667,098	1,469		0.13
Money market	Money market	5,110,817		1,012		0.08		3,732,988		1,804		0.20		Money market	5,223,267		25,066		1.95		5,110,817		1,012		0.08
Savings	Savings	1,436,881		72		0.02		989,584		49		0.02		Savings	1,416,931		538		0.15		1,436,881		72		0.02
Time	Time	1,758,895		534		0.12		1,642,423		1,588		0.39		Time	2,348,588		12,313		2.13		1,758,895		534		0.12
Brokered time deposits	Brokered time deposits	79,092		44		0.23		75,259		292		1.57		Brokered time deposits	208,215		2,345		4.57		79,092		44		0.23
Total interest-bearing deposits	Total interest-bearing deposits	13,052,783		3,131		0.10		9,771,297		5,219		0.22		Total interest-bearing deposits	13,696,908		57,861		1.71		13,052,783		3,131		0.10

Federal funds purchased and other borrowings	Federal funds purchased and other borrowings	611		—		—		12		—		—		Federal funds purchased and other borrowings	107,955		1,148		4.31		611		—		—
Federal Home Loan Bank advances	Federal Home Loan Bank advances	—		—		—		3,333		2		0.24		Federal Home Loan Bank advances	453,056		5,112		4.58		—		—		—
Long-term debt	Long-term debt	318,995		4,136		5.26		317,172		4,257		5.44		Long-term debt	324,701		3,896		4.87		318,995		4,136		5.26
Total borrowed funds	Total borrowed funds	319,606		4,136		5.25		320,517		4,259		5.39		Total borrowed funds	885,712		10,156		4.65		319,606		4,136		5.25
Total interest-bearing liabilities	Total interest-bearing liabilities	13,372,389		7,267		0.22		10,091,814		9,478		0.38		Total interest-bearing liabilities	14,582,620		68,017		1.89		13,372,389		7,267		0.22

Noninterest-bearing liabilities:	Noninterest-bearing liabilities:													Noninterest-bearing liabilities:
Noninterest-bearing deposits	Noninterest-bearing deposits	7,666,635						5,594,394						Noninterest-bearing deposits	7,697,844						7,666,635
Other liabilities	Other liabilities	378,327						312,610						Other liabilities	357,367						378,327
Total liabilities	Total liabilities	21,417,351						15,998,818						Total liabilities	22,637,831						21,417,351
Shareholders' equity	Shareholders' equity	2,786,284						2,024,643						Shareholders' equity	3,131,469						2,786,284
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	24,203,635					$	18,023,461					Total liabilities and shareholders' equity	$	25,769,300					$	24,203,635

Net interest revenue (FTE)	Net interest revenue (FTE)			$	164,966					$	133,052			Net interest revenue (FTE)			$	212,575					$	164,966
Net interest-rate spread (FTE)	Net interest-rate spread (FTE)					2.88	%					3.06	%	Net interest-rate spread (FTE)					2.87	%					2.88	%
Net interest margin (FTE) (4)	Net interest margin (FTE) (4)					2.97	%					3.22	%	Net interest margin (FTE) (4)					3.61	%					2.97	%

(1)Interest revenue on tax-exempt securities and loans has been increased to reflect comparable interest on taxable securities and loans. The rate used was 26%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.

(2)Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.

(3)Unrealized losses on securities, including those related to the transfer from AFS ~~securities are shown at amortized cost.~~to HTM, have been reclassified to other assets. Pretax unrealized losses of $419 million and $81.2 million in 2023 and ~~pretax unrealized gains of $58.3 million in~~ 2022, ~~and 2021,~~ 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.

4142

The following table shows the relative effect on net interest revenue for changes in the average outstanding amounts (volume) of interest-earning assets and interest-bearing liabilities and the rates earned and paid on such assets and liabilities (rate). Variances resulting from a combination of changes in rate and volume are allocated in proportion to the absolute dollar amounts of the change in each category.


Table 3 - Change in Interest Revenue and Expense on a Taxable Equivalent Basis
(in thousands)

Three Months Ended March 31, 2022
Compared to 2021 Increase (Decrease) Due to Changes in
Volume Rate Total
Interest-earning assets:
Loans (FTE) $ 29,204 $ (7,689) $ 21,515
Taxable securities 7,768 (56) 7,712
Tax-exempt securities (FTE) 1,581 (903) 678
Federal funds sold and other interest-earning assets 390 (592) (202)
Total interest-earning assets (FTE) 38,943 (9,240) 29,703
Interest-bearing liabilities:
NOW and interest-bearing demand accounts 495 (512) (17)
Money market accounts 515 (1,307) (792)
Savings deposits 22 1 23
Time deposits 105 (1,159) (1,054)
Brokered deposits 14 (262) (248)
Total interest-bearing deposits 1,151 (3,239) (2,088)
Federal funds purchased & other borrowings — — —
FHLB advances (2) — (2)
Long-term debt 24 (145) (121)
Total borrowed funds 22 (145) (123)
Total interest-bearing liabilities 1,173 (3,384) (2,211)
Increase in net interest revenue (FTE) $ 37,770 $ (5,856) $ 31,914


	Three Months Ended March 31, 2023
	Compared to 2022 Increase (Decrease) Due to Changes in
	Volume		Rate		Total
Interest-earning assets:
Loans (FTE)	$	30,812	$	59,081	$	89,893
Taxable securities	781		16,085		16,866
Tax-exempt securities (FTE)	(597)		(135)		(732)
Federal funds sold and other interest-earning assets	(1,333)		3,665		2,332
Total interest-earning assets (FTE)	29,663		78,696		108,359

Interest-bearing liabilities:
NOW and interest-bearing demand accounts	(55)		16,185		16,130
Money market accounts	23		24,031		24,054
Savings deposits	(1)		467		466
Time deposits	238		11,541		11,779
Brokered deposits	180		2,121		2,301
Total interest-bearing deposits	385		54,345		54,730

Federal funds purchased & other borrowings	1,148		—		1,148
FHLB advances	5,112		—		5,112
Long-term debt	73		(313)		(240)
Total borrowed funds	6,333		(313)		6,020
Total interest-bearing liabilities	6,718		54,032		60,750

Increase in net interest revenue (FTE)	$	22,945	$	24,664	$	47,609

Provision for Credit Losses

The ACL represents management’s estimate of life of loan credit losses in the loan portfolio and unfunded loan commitments. Management’s estimate of credit losses under CECL is determined using a model that relies on reasonable and supportable forecasts and historical loss information to determine the balance of the ACL and resulting provision for credit losses.

We recorded a provision for credit losses of ~~$23.1 million and a release of provision of $12.3~~$21.8 million for the three months ended March 31, ~~2022 and 2021, respectively.~~2023, compared to $23.1 million for the same period of 2022. The amount of provision recorded in each period was the amount required such that the total ACL reflected the appropriate balance as determined by management reflecting expected life of loan losses. The provision recorded for the first quarter of 2023 included the initial provision for credit losses ~~during~~on Progress non-PCD loans and unfunded commitments of $8.80 million and $1.65 million, respectively. The provision for credit losses for the first quarter of 2022 included the initial provision for credit losses on ~~Reliant’s~~Reliant non-PCD loans and unfunded commitments of $15.2 million and $3.12 million, respectively. The ~~negative~~decrease in acquisition-related provision in the first quarter of 2023 was partially offset by provision expense ~~for the three months ended March 31, 2021 was primarily a result of an improved economic forecast combined with~~related to organic loan growth and higher net ~~recoveries, mostly driven by one large commercial credit during~~charge-offs relative to the first ~~quarter.~~quarter of 2022.

Additional discussion on credit quality and the ACL is included in the “Asset Quality and Risk Elements” section of MD&A in this Report.

4243

Noninterest Income

The following table presents the components of noninterest income for the periods indicated.


Table 4 - Noninterest Income
(in thousands)

Three Months Ended
March 31, Change
2022 2021 Amount Percent
Service charges and fees:
Overdraft fees $ 2,416 $ 2,342 $ 74 3 %
ATM and debit card fees 3,991 3,090 901 29
Other service charges and fees 2,663 2,138 525 25
Total service charges and fees 9,070 7,570 1,500 20
Mortgage loan gains and related fees 16,152 22,572 (6,420) (28)
Wealth management fees 5,895 3,505 2,390 68
Gains on sales of other loans 3,198 1,030 2,168 210
Other lending and loan servicing fees 2,986 2,160 826 38
Securities losses, net (3,734) — (3,734)
Other noninterest income:
Customer derivatives 786 1,692 (906) (54)
Other investment gains (losses) (499) 1,506 (2,005)
BOLI 1,337 857 480 56
Treasury management income 818 645 173 27
Other 2,964 3,168 (204) (6)
Total other noninterest income 5,406 7,868 (2,462) (31)
Total noninterest income $ 38,973 $ 44,705 $ (5,732) (13)

The increase in total service charges and fees was primarily driven by the acquisitions of Aquesta and Reliant since the first quarter of 2021. The increase in overdraft fees from acquisitions was partially offset by the impact of our updated consumer overdraft policy implemented in the fourth quarter of 2021. The policy updates included the addition of a fee forgiveness feature, which provides one fee waiver per year per account, an increase to the overdraft threshold, which is the amount an account balance must be overdrawn before a fee is charged, and a lower daily fee item limit. The first quarter of each year is expected to be most impacted by the updated policy as many customers may receive their fee waiver during the first quarter.


	Three Months Ended March 31,	Change
		2023		2022		Amount		Percent
Service charges and fees:
Overdraft fees		$	2,492	$	2,416	$	76	3	%
ATM and debit card fees		3,775		3,991		(216)		(5)
Other service charges and fees		2,432		2,663		(231)		(9)
Total service charges and fees		8,699		9,070		(371)		(4)
Mortgage loan gains and related fees		4,521		16,152		(11,631)		(72)
Wealth management fees		5,724		5,895		(171)		(3)
Gains on sales of other loans		1,916		3,198		(1,282)		(40)
Lending and loan servicing fees		4,016		2,986		1,030		34
Securities gains (losses), net		(1,644)		(3,734)		2,090
Other noninterest income:
Customer derivatives		355		786		(431)		(55)
Other investment gains (losses)		1,064		(499)		1,563
BOLI		1,615		1,337		278		21
Treasury management income		1,104		818		286		35
Other		2,839		2,964		(125)		(4)
Total other noninterest income		6,977		5,406		1,571		29
Total noninterest income		$	30,209	$	38,973	$	(8,764)	(22)

Mortgage loan gains and related fees ~~consists~~consist primarily of fees earned on mortgage originations, gains on the sale of mortgages in the secondary market, mortgage derivative hedging gains and losses and fair value adjustments to our mortgage servicing asset. The change in mortgage income is strongly tied to the interest rate environment and industry conditions. We recognize the majority of fees on mortgages when customers enter into mortgage rate lock commitments, making our mortgage rate lock volume a significant driver of mortgage gains in any given period.

The decrease in mortgage loan gains and related fees was primarily a result of ~~tapering~~the decrease in mortgage refinance and mortgage rate lock demand compared to the first quarter of ~~2021,~~2022, as shown in the following table. ~~Additionally, our gain on sale spread decreased compared to~~In addition, during the first quarter of 2021 from 4.41% to 1.97%. The impact of the decrease in the gain on sale was partially mitigated by our mortgage hedging activities, which, when included, made our gain on sale spread for first quarters of 2022 and 2021 3.61% and 5.33%, respectively. During the first quarter of 2022,2023, we recorded a ~~$6.38~~$1.10 million ~~positive~~negative fair value adjustment, including decay, to the mortgage servicing rights asset, ~~which partially offset the decrease in mortgage loan gains~~compared to a $5.31 million positive fair value adjustment, including decay, during the ~~three months ended March 31,~~first quarter of 2022.


Table 5 - Mortgage Loan Metrics (1)
(dollars in thousands)
		Three Months Ended March 31,
		2023		2022		% Change
	Mortgage rate locks	$	334,697	$	757,348	(56)	%
	# of mortgage rate locks	923		1,923		(52)

	Mortgage loans sold	$	79,279	$	207,152	(62)
	# of mortgage loans sold	295		788		(63)

	Mortgage loans originated:
	Purchases	$	192,693	$	313,512	(39)
	Refinances	31,852		148,445		(79)
	Total	$	224,545	$	461,957	(51)

	# of mortgage loans originated	617		1,202		(49)

Table 5 - Mortgage Loan Metrics (1)
(dollars in thousands)
Three Months Ended
March 31,
2022 2021 % Change
Mortgage rate locks $ 757,348 $ 993,339 (24) %
# of mortgage rate locks 1,923 2,982 (36)
Mortgage loans sold $ 207,152 $ 335,673 (38)
# of mortgage loans sold 788 1,405 (44)
Mortgage loans originated:
Purchases $ 313,512 $ 292,919 7
Refinances 148,445 363,553 (59)
Total $ 461,957 $ 656,472 (30)
# of mortgage loans originated 1,202 2,142 (44)

~~(1)~~ ~~Excludes Reliant mortgage production for the first quarter.~~

Wealth management fees for the first quarter of 2022 increased 68% compared to the same period of 2021, which was primarily driven by the addition of FinTrust’s wealth management business. Assets under administration totaled $4.58 billion and $2.35 billion as of March 31, 2022 and 2021, respectively.

Our SBA/USDA lending strategy includes selling a portion of the loan production each quarter. The amount of loans sold depends on several variables including the current lending environment, ~~and~~ balance sheet management ~~activities. During the first quarter of 2022, we sold more SBA/USDA loans compared to the same period of last year, due to favorable~~activities and market ~~conditions.~~pricing. From time to time, we also sell certain equipment financing receivables. The following table presents loans sold and the corresponding gains ~~or losses~~ recognized on the ~~sale~~sales for the periods indicated.


Table 6 - Other Loan Sales	Table 6 - Other Loan Sales										Table 6 - Other Loan Sales
(in thousands)	(in thousands)										(in thousands)
			Three Months Ended March 31,										Three Months Ended March 31,
			2022				2021						2023				2022
			Loans Sold		Gain (Loss)		Loans Sold		Gain (Loss)				Loans Sold		Gain		Loans Sold		Gain
		Guaranteed portion of SBA/USDA loans	$	28,343	$	2,466	$	11,345	$	1,023		Guaranteed portion of SBA/USDA loans	$	21,770	$	1,523	$	28,343	$	2,466
		Equipment financing receivables	23,436		732		1,059		7			Equipment financing receivables	18,703		393		23,436		732
		Total	$	51,779	$	3,198	$	12,404	$	1,030		Total	$	40,473	$	1,916	$	51,779	$	3,198

Lending and loan servicing fees increased mostly due to a positive fair value adjustment on our SBA loan servicing asset and volume-driven fee income from our equipment finance business.

During the first ~~quarter~~quarters of 2023 and 2022, we sold certain ~~lower-yielding securities with the strategic intent of reinvesting in higher-yielding~~ securities, which resulted in net securities ~~losses for the period.~~losses. During 2023, proceeds from sales were used to fund loan growth and repay FHLB advances. During 2022, we strategically reinvested in higher-yielding securities.

~~The change in~~Our other ~~noninterest income for the first quarter of 2022 compared to the first quarter of 2021 was primarily driven by the following factors:~~

•~~BOLI income increased compared to the first quarter of 2021 primarily due to income earned on BOLI acquired in connection with the acquisition of Reliant.~~

•Customer derivative income decreased compared to the first quarter of 2021 due to increases in interest rates negatively impacting the demand for customer derivative products. This was partially offset by improvements in the CVA on customer derivatives. The CVA improved due to rising interest rates, which lowered our overall credit exposure on customer derivative positions, and credit upgrades to underlying loans associated with customer derivative positions.

•~~We recorded losses on our other~~ investments ~~which~~ include deferred compensation plan assets, CRA investments, other equity securities and ~~other~~limited partnership investments. During the first quarter of 2023,we recorded net unrealized gains on these investments, primarily driven by unrealized gains on equity securities compared to ~~gains~~net losses during the first quarter of ~~2021.~~2022 and equity method income from limited partnership investments.

Noninterest Expenses

The following table presents the components of noninterest expenses for the periods indicated.


Table 7 - Noninterest Expenses
(in thousands)

Three Months Ended
March 31, Change
2022 2021 Amount Percent
Salaries and employee benefits $ 71,006 $ 60,585 $ 10,421 17 %
Communications and equipment 9,248 7,203 2,045 28
Occupancy 9,378 6,956 2,422 35
Advertising and public relations 1,488 1,199 289 24
Postage, printing and supplies 2,119 1,822 297 16
Professional fees 4,447 4,234 213 5
Lending and loan servicing expense 2,366 2,877 (511) (18)
Outside services - electronic banking 2,523 2,218 305 14
FDIC assessments and other regulatory charges 2,173 1,896 277 15
Amortization of intangibles 1,793 985 808 82
Other 3,718 3,676 42 1
Total excluding merger-related and other charges 110,259 93,651 16,608 18
Merger-related and other charges 9,016 1,543 7,473
Total noninterest expenses $ 119,275 $ 95,194 $ 24,081 25



	Three Months Ended March 31,	Change
		2023		2022		Amount		Percent
Salaries and employee benefits		$	78,698	$	71,006	$	7,692	11	%
Communications and equipment		10,008		9,248		760		8
Occupancy		9,889		9,378		511		5
Advertising and public relations		2,349		1,488		861		58
Postage, printing and supplies		2,537		2,119		418		20
Professional fees		6,072		4,447		1,625		37
Lending and loan servicing expense		2,319		2,366		(47)		(2)
Outside services - electronic banking		3,425		2,523		902		36
FDIC assessments and other regulatory charges		4,001		2,173		1,828		84
Amortization of intangibles		3,528		1,793		1,735		97
Other		8,348		3,718		4,630		125
Total excluding merger-related and other charges		131,174		110,259		20,915		19
Merger-related and other charges		8,631		9,016		(385)

Total noninterest expenses		$	139,805	$	119,275	$	20,530	17

Approximately half of the year over year increase in operating expenses is due to the acquisition of Progress on January 3, 2023.

The increase in salaries and employee benefits for the first quarter of ~~2022~~2023 compared to the same period of ~~2021~~2022 was primarily driven by the addition of ~~Reliant, Aquesta~~Progress employees. Merit increases, which included annual increases that went into effect for all employees on April 1, 2022 as well as a targeted mid-year 2022 increase in the third quarter, also contributed to the rise in salaries and ~~FinTrust employees, which~~employee

benefits expense. Although mortgage commissions were down from a year ago, the decrease was ~~partially~~mostly offset by lower deferred ~~compensation expense~~direct loan origination costs and ~~an increase~~higher production incentives in ~~deferred loan fees resulting from strong loan production.~~other lending areas. Full time equivalent headcount totaled 3,052 at March 31, 2023, up from 2,893 at March 31, ~~2022, up from 2,396 at March 31, 2021.~~2022.

Communications and equipment expense increased primarily driven by incremental software contract costs and the growth in our network with the addition of recent acquisitions. The increase in occupancy costs for the first quarter of ~~2022~~2023 compared to the same period of ~~2021~~2022 was mostly attributable to the additional operating lease costs associated with ~~Reliant, Aquesta and FinTrust.~~the acquisition of Progress. The decrease in lending and loan servicing expense was driven by lower mortgage loan production compared to that of the first quarter of ~~2021.~~2022. The increase in FDIC assessments and other regulatory charges was primarily attributable to the 2 basis point assessment rate increase that went into effect for all banks on January 1, 2023, as well as an increased assessment base driven by higher average total ~~assets.~~assets partly resulting from the Progress acquisition. Amortization of intangibles increased with the additional customer deposit ~~and customer relationship~~ intangibles recorded as a result of ~~acquisitions since~~ the ~~first quarter of 2021. Increased merger-related~~Progress acquisition. Merger-related charges for the first quarter of ~~2022~~2023 were primarily related to the acquisition of ~~Reliant.~~Progress.

Balance Sheet Review

Total assets at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 were ~~$24.4~~$25.9 billion and ~~$20.9~~$24.0 billion, respectively. Total liabilities at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 were ~~$21.7~~$22.8 billion and ~~$18.7~~$21.3 billion, respectively. Shareholders’ equity totaled ~~$2.70~~$3.08 billion and ~~$2.22~~$2.70 billion at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Loans

Our loan portfolio is our largest category of interest-earning assets. The following table presents a summary of the loan portfolio by loan type as of March 31, ~~2022,~~2023, of which approximately ~~73%~~74% was secured by real estate. ~~Commercial and industrial loans as of March 31, 2022 included $34.0 million of PPP loans.~~

Table 8 - Loan Portfolio Composition

As of March 31, ~~2022~~2023

Asset Quality and Risk Elements

We manage asset quality and control credit risk through review and oversight of the loan portfolio as well as adherence to policies designed to promote sound underwriting and loan monitoring practices. Our credit risk management function is responsible for monitoring asset quality and Board approved portfolio concentration limits, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures.

We conduct reviews of special mention and substandard performing and non-performing loans, ~~TDRs,~~ 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 risk rating policies and procedures.

The ACL reflects our assessment of the life of loan expected credit losses in the loan portfolio and unfunded loan commitments. This assessment involves uncertainty and judgment and is subject to change in future periods. The amount of any changes could be significant if our assessment of loan quality or collateral values changes substantially with respect to one or more loan relationships or portfolios. The allocation of the ACL is based on reasonable and supportable forecasts, historical data, subjective judgment and estimates and therefore, is not necessarily indicative of the specific amounts or loan categories in which charge-offs may ultimately occur. Changes in the ACL and provision for credit losses since adoption of CECL on January 1, 2020 were primarily driven by forecast changes rather than observable changes in credit quality as the ACL is highly dependent on the economic forecast. 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 of MD&A in our ~~2021~~2022 10-K for additional information on the allowance for credit losses.

Table 9 - Allocation of ACL

(in thousands)


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		ACL			% of loans in each category to total loans	ACL			% of loans in each category to total loans		ACL			% of loans in each category to total loans	ACL			% of loans in each category to total loans
Owner occupied commercial real estate	Owner occupied commercial real estate	$	15,945		19	$	14,282		20	Owner occupied commercial real estate	$	20,831		18	$	19,834		18
Income producing commercial real estate	Income producing commercial real estate	33,539			23	24,156			22	Income producing commercial real estate	33,607			21	32,082			21
Commercial & industrial	Commercial & industrial	18,386			16	16,592			16	Commercial & industrial	28,312			14	23,504			15
Commercial construction	Commercial construction	13,782			10	9,956			9	Commercial construction	22,073			11	20,120			10
Equipment financing	Equipment financing	19,264			8	16,290			9	Equipment financing	26,195			9	23,395			9
Total commercial	Total commercial	100,916			76	81,276			76	Total commercial	131,018			73	118,935			73
Residential mortgage	Residential mortgage	14,964			13	12,390			14	Residential mortgage	24,082			16	20,809			15
HELOC	HELOC	7,128			5	6,568			6	HELOC	10,337			5	8,707			6
Residential construction	Residential construction	1,929			3	1,847			3	Residential construction	2,043			3	2,049			3
Manufactured housing	Manufactured housing	7,083			2	—			—	Manufactured housing	8,424			2	8,098			2
Consumer	Consumer	785			1	451			1	Consumer	630			1	759			1
Total ACL - loans	Total ACL - loans	132,805			100	102,532			100	Total ACL - loans	176,534			100	159,357			100
ACL - unfunded commitments	ACL - unfunded commitments	13,564				10,992				ACL - unfunded commitments	21,389				21,163
Total ACL	Total ACL	$	146,369			$	113,524			Total ACL	$	197,923			$	180,520

ACL - loans as a percentage of total loans	ACL - loans as a percentage of total loans	0.93		%		0.87		%		ACL - loans as a percentage of total loans	1.03		%		1.04		%

ACL - loans as a percentage of nonaccrual loans HFI		350				312
ACL - loans as a percentage of nonaccrual loans										ACL - loans as a percentage of nonaccrual loans	243				360

The increase in the ACL since December 31, ~~2021~~2022 was primarily driven by the acquisition of ~~Reliant,~~Progress, which added ~~$31.1~~$13.2 million to the ACL as of the acquisition date. Of this amount, ~~$12.7~~$2.70 million was reclassified from the amortized cost basis of PCD loans, ~~$15.2~~$8.80 million was recorded as provision for loan losses on acquired non-PCD loan balances and ~~$3.12~~$1.65 million was recorded as provision for unfunded commitments on the acquired balance of unfunded commitments. See Provision for Credit Losses discussion within this MD&A for further information.

The following table presents a summary of net charge-offs to average loans for the periods indicated.


Table 10 - Net Charge-offs to Average Loans
(in thousands)

Three Months Ended
March 31,
2022 2021
Net charge-offs (recoveries)
Owner occupied commercial real estate $ (45) $ (240)
Income producing commercial real estate (290) 991
Commercial & industrial 2,929 (2,753)
Commercial construction (373) 22
Equipment financing 267 1,511
Residential mortgage (97) 92
HELOC (81) (73)
Residential construction (23) (60)
Manufactured housing 164 —
Consumer 527 205
Total net charge-offs (recoveries) $ 2,978 $ (305)
Average loans
Owner occupied commercial real estate $ 2,618,981 $ 2,081,644
Income producing commercial real estate 3,311,373 2,548,614
Commercial & industrial 2,333,079 2,552,328
Commercial construction 1,460,433 955,852
Equipment financing 1,134,584 880,980
Residential mortgage 1,818,838 1,312,687
HELOC 774,081 682,482
Residential construction 372,930 274,255
Manufactured housing 265,481 —
Consumer 144,246 144,066
Total average loans $ 14,234,026 $ 11,432,908
Net charge-offs to average loans
Owner occupied commercial real estate (0.01) % (0.05) %
Income producing commercial real estate (0.04) 0.16
Commercial & industrial 0.51 (0.44)
Commercial construction (0.10) 0.01
Equipment financing 0.10 0.70
Residential mortgage (0.02) 0.03
HELOC (0.04) (0.04)
Residential construction (0.03) (0.09)
Manufactured housing 0.25 —
Consumer 1.48 0.58
Total 0.08 (0.01)


	Three Months Ended March 31,
		2023			2022






Net charge-offs (recoveries)
Owner occupied commercial real estate		$	90		$	(45)
Income producing commercial real estate		2,306			(290)
Commercial & industrial		225			2,929
Commercial construction		(37)			(373)
Equipment financing		3,375			267
Residential mortgage		(87)			(97)
HELOC		33			(81)
Residential construction		(15)			(23)
Manufactured housing		628			164
Consumer		566			527
Total net charge-offs (recoveries)		$	7,084		$	2,978

Average loans
Owner occupied commercial real estate		$	3,058,802		$	2,618,981
Income producing commercial real estate		3,577,883			3,311,373
Commercial & industrial		2,443,581			2,333,079
Commercial construction		1,771,940			1,460,433
Equipment financing		1,468,538			1,134,584
Residential mortgage		2,660,345			1,818,838
HELOC		926,806			774,081
Residential construction		486,686			372,930
Manufactured housing		334,754			265,481
Consumer		168,037			144,246
Total average loans		$	16,897,372		$	14,234,026

Net charge-offs to average loans (1)
Owner occupied commercial real estate		0.01		%	(0.01)		%
Income producing commercial real estate		0.26			(0.04)
Commercial & industrial		0.04			0.51
Commercial construction		(0.01)			(0.10)
Equipment financing		0.93			0.10
Residential mortgage		(0.01)			(0.02)
HELOC		0.01			(0.04)
Residential construction		(0.01)			(0.03)
Manufactured housing		0.76			0.25
Consumer		1.37			1.48
Total		0.17			0.08

(1) Annualized.

Nonperforming Assets

The table below summarizes NPAs ~~which~~for the periods indicated. NPAs include nonaccrual loans, OREO and repossessed ~~assets, totaled $40.8 million at March 31, 2022, compared with $32.9 million at December 31, 2021.~~assets. The increase in ~~NPAs~~nonaccrual loans since December 31, ~~2021~~2022 is primarily driven by a ~~result~~small number of large loans that moved to nonaccrual status during the ~~addition~~first quarter of ~~Reliant NPAs, which totaled $6.00 million.~~2023.


Table 11 - NPAs
(in thousands)


	March 31, 2023			December 31, 2022
Nonaccrual loans	72,795			44,232

OREO and repossessed assets	608			49
Total NPAs	$	73,403		$	44,281

Nonaccrual loans as a percentage of total loans	0.43		%	0.29		%

NPAs as a percentage of total assets	0.28			0.18

Our policy is to place loans on nonaccrual status when, in the opinion of management, the full principal and interest on a loan is not likely to be collected or when the loan becomes 90 days past due. A loan may continue on accrual after 90 days, however, if it is well collateralized and in the process of collection. When a loan is placed on nonaccrual status, interest previously accrued but not collected is reversed against current interest revenue. Interest payments received on nonaccrual loans are applied to reduce the loan’s amortized

cost. Loans are generally returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a sustained period of repayment performance and future payments are reasonably assured.

Generally, we do not commit to lend additional funds to customers whose loans are on nonaccrual status, although in certain isolated cases, we execute forbearance agreements whereby we agree to continue to fund construction loans to completion or other lines of credit as long as the borrower meets the conditions of the forbearance agreement. We may also fund other amounts necessary to protect collateral such as amounts to pay past due property taxes and insurance coverage.

~~The table below summarizes NPAs.~~


~~Table 11 - NPAs~~
~~(in thousands)~~

March 31,
2022 December 31,
2021
Nonaccrual loans HFI 37,944 32,812
Nonaccrual loans held for sale 2,033 —
OREO and repossessed assets 839 43
Total NPAs $ 40,816 $ 32,855
Nonaccrual loans HFI as a percentage of total loans HFI 0.27 % 0.28 %
NPAs as a percentage of total assets 0.17 0.16

At March 31, 2022 and December 31, 2021, we had $51.2 million and $52.4 million, respectively, in loans with terms that have been modified in TDRs. Included therein were $11.3 million and $11.5 million, respectively, of TDRs that were classified as nonaccrual and were included in nonperforming loans. The remaining TDRs with an aggregate balance of $39.9 million and $40.9 million, respectively, were performing according to their modified terms and were therefore not considered to be nonperforming assets.

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.

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had HTM debt securities with a carrying amount of ~~$2.50~~$2.58 billion and ~~$1.16~~$2.61 billion, respectively, and AFS debt securities totaling ~~$3.91~~$3.33 billion and ~~$4.50~~$3.61 billion, respectively. ~~During~~In the first quarter of 2023, we sold $381 million in AFS securities, including approximately $111 million in securities received through the Progress acquisition, primarily for the purpose of providing liquidity to fund loan growth. At March 31, 2023 and December 31, 2022, ~~we transferred $1.11~~the securities portfolio represented approximately 23% and 26%, respectively, of total assets.

At March 31, 2023, HTM debt securities had a fair value of $2.21 billion, indicating net unrealized losses of $377 million. Additional unrealized losses on HTM debt securities of $75.4 million (pre-tax) were included in AOCI as a result of the transfer of AFS debt securities to ~~HTM. As of the transfer date, these securities had $57.4 million of unrealized~~HTM in 2022. Unrealized losses ~~included~~were primarily attributable to changes in AOCI. These transfer-date unrealized losses will be reclassified out of AOCI as a yield adjustment and reduce earnings over the remaining life of the security. Since December 31, 2021, we have continued to deploy liquidity generated through strong deposit growth by purchasing additional investment securities. At March 31, 2022 and December 31, 2021, the securities portfolio represented approximately 26% and 27%, respectively, of total assets.interest rates.

In accordance with CECL, our HTM debt securities portfolio is evaluated quarterly to assess whether an ACL is required. We measure expected credit losses on HTM debt securities on a collective basis by major security type. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, calculated credit losses on HTM debt securities were 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, if we intend to sell, or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, the security's amortized cost basis is written down to fair value through income. Absent circumstances when an ~~intent or more than likely requirement to sell,~~AFS security would be sold, we evaluate whether the decline in fair value has resulted from credit losses or other factors. The evaluation considers factors such as the extent to which fair value is less than amortized cost, changes to the security’s rating, and adverse conditions specific to the security. If the evaluation indicates a credit loss exists, an ACL

may be recorded, with such allowance limited to the amount by which fair value is below amortized cost. Any impairment unrelated to credit factors is recognized in OCI. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there was no ACL related to the AFS debt securities portfolio. ~~Losses on fixed income securities~~Unrealized losses at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 primarily reflected the effect of changes in interest rates.

Goodwill and Other Intangible Assets

Goodwill represents the premium paid for acquired companies above the net fair value of the assets acquired and liabilities assumed, including separately identifiable intangible assets. Management evaluates goodwill annually, or more frequently if necessary, to determine if any impairment exists. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the net carrying amount of goodwill was ~~$751~~$897 million and ~~$452~~$751 million, respectively.

We also have core deposit and customer relationship intangible assets, representing the value of acquired deposit and customer relationships, respectively, which are amortizing intangible assets. Amortizing intangible assets are required to be tested for impairment only when events or circumstances indicate that impairment may exist.

In connection with the acquisition of ~~Reliant,~~Progress in the first quarter of 2023, we recorded goodwill and a core deposit intangible of ~~$299~~$146 million and ~~$14.5~~$40.0 million, respectively.

Deposits

Customer deposits are the primary source of funds for the continued growth of our earning assets. Our high level of service, as evidenced by our strong customer satisfaction scores, has been instrumental in attracting and retaining customer deposit accounts. The increase in deposits since December 31, ~~2021 is~~2022 was mostly driven by the deposits assumed in the ~~Reliant~~Progress transaction, ~~as well as~~although we also generated organic ~~growth.~~growth by increasing the rates offered on deposits. As of March 31, 2023, we had approximately $8.00 billion of uninsured deposits, of which $2.39 billion was collateralized by investment securities.


Table 12 - Deposits
(in thousands)

March 31, 2022 December 31, 2021
Noninterest-bearing demand $ 7,946,049 $ 6,956,981
NOW and interest-bearing demand 4,650,997 4,252,209
Money market and savings 6,555,358 5,399,133
Time 1,704,657 1,442,498
Total customer deposits 20,857,061 18,050,821
Brokered deposits 199,092 190,358
Total deposits $ 21,056,153 $ 18,241,179


	March 31, 2023		December 31, 2022
Noninterest-bearing demand	$	7,540,265	$	7,643,081
NOW and interest-bearing demand	4,769,663		4,350,878
Money market and savings	6,503,422		5,967,017
Time	2,703,568		1,781,482
Total customer deposits	21,516,918		19,742,458
Brokered deposits	487,756		134,049
Total deposits	$	22,004,674	$	19,876,507

Borrowing Activities

At both March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had long-term debt outstanding of ~~$324~~$325 million, ~~and $247 million, respectively,~~ which includes senior debentures, subordinated debentures, and trust preferred securities. Also at March 31, 2023 and December 31, 2022, we had short-term borrowings outstanding of $7.22 million and $159 million, respectively, which was mostly comprised of repurchase agreements, and we had $30.0 million and $550 million, respectively, of FHLB advances outstanding. We began using these short-term funding sources in mid 2022 due to balance attrition in our deposit accounts and our need to fund loan growth. The ~~increase~~decrease since December 31, ~~2021~~2022 is a result of the ~~subordinated debt~~sale of investment securities noted above and ~~trust preferred securities assumed~~growth in ~~the Reliant acquisition totaling $76.7 million. See Note 9~~customer and brokered deposits which allowed us to ~~the consolidated financial statements for further details.~~fund first quarter loan growth and repay short-term borrowings.

Contractual Obligations

There have not been any material changes to our contractual obligations since December 31, ~~2021.~~2022.

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 include commitments to extend credit, letters of credit and financial guarantees.

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.

All of these instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. 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 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 2223 to the consolidated financial statements included in our ~~2021~~2022 10-K and Note 15 to the consolidated financial statements in this Report for additional information on off-balance sheet arrangements.

Interest Rate Sensitivity Management

The absolute level and volatility of interest rates can have a significant effect on profitability. The objective of interest rate risk management is to identify and manage the sensitivity of net interest revenue to changing interest rates, consistent with our overall financial goals. Based on economic conditions, asset quality and various other considerations, management establishes tolerance ranges for interest rate sensitivity and manages within these ranges.

Net interest revenue and the fair value of financial instruments are influenced by changes in the level of interest rates. We limit our exposure to fluctuations in interest rates through policies established by our ALCO and approved by the Board. The ALCO meets periodically and has responsibility for formulating and recommending asset/liability management policies to the Board, formulating and implementing strategies to improve balance sheet positioning and/or earnings, and reviewing interest rate sensitivity.

One of the tools management uses to estimate and manage the sensitivity of net interest revenue to changes in interest rates is an asset/liability simulation model. Resulting estimates are based upon ~~several~~multiple assumptions for each scenario, including loan and deposit re-pricing characteristics and the rate of prepayments. The ALCO periodically reviews the assumptions for reasonableness based on historical data and future expectations; however, actual net interest revenue may differ from model results. The primary objective of the simulation model is to measure the potential change in net interest revenue over time using multiple interest rate scenarios. The base scenario assumes rates remain flat and is the scenario to which all others are compared, in order to measure the change in net interest revenue. Policy limits are based on immediate rate shock scenarios, as well as gradually rising and falling rate scenarios, which are all compared to the base scenario. Our assumptions include floors such that market rates and discount rates do not go below zero. Other scenarios analyzed may include delayed rate shocks, yield curve steepening or flattening, or other variations in rate movements. While the primary policy scenarios focus on a 12-month time frame, longer time horizons are also modeled.

Our policy is based on the 12-month impact on net interest revenue of interest rate shocks and ramps that increase from 100 to 400 basis points or decrease 100 to 200 basis points from the base scenario. In the shock scenarios, rates immediately change the full amount at the scenario onset. In the ramp scenarios, rates change by 25 basis points per month. Our policy limits the projected change in net interest revenue over the first 12 months to an 8% decrease for each 100 basis point change in the increasing and decreasing rate ramp and shock scenarios. The following table presents our interest sensitivity position at the dates indicated.


Table 13 - Interest Sensitivity
(in thousands)

Increase (Decrease) in Net Interest Revenue from Base Scenario at
March 31, 2022 December 31, 2021
Change in Rates Shock Ramp Shock Ramp
200 basis point increase 11.93 % 8.18 % 8.02 % 4.76 %
100 basis point increase 5.39 4.47 3.87 3.07
100 basis point decrease (4.72) (3.93) (4.45) (3.80)
200 basis point decrease (7.93) (5.64) (5.54) (4.51)


	Increase (Decrease) in Net Interest Revenue from Base Scenario at
	March 31, 2023				December 31, 2022
Change in Rates	Shock		Ramp		Shock		Ramp
200 basis point increase	5.69	%	3.19	%	6.97	%	4.33	%
100 basis point increase	2.90		2.25		3.53		2.85
100 basis point decrease	(2.98)		(2.38)		(3.78)		(3.12)
200 basis point decrease	(7.02)		(3.88)		(8.39)		(5.07)

~~Interest rate~~Our interest sensitivity ~~is a function~~model includes significant key assumptions, including an assumption 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 tono change in ~~interest rates either at replacement, repricing~~deposit portfolio size or ~~maturity. Interest~~composition. Additionally, in rising 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 seeks to ensure~~environments, we use a deposit beta assumption 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.

~~We have discretion~~is consistent with our experience in the ~~extent and timing of~~last upward rate cycle from November 2015 to July 2019. The modeled deposit ~~repricing depending upon~~beta, which is measured as the ~~competitive pressures~~change in the markets in which we operate. Changes in the mix of earning assets or supporting liabilities can either increase or decrease the net interest margin without affecting interest rate sensitivity. The interest rate spread between an asset and its supporting liability can vary significantly even when the timing of repricing for both the asset and the liability remains the same, due to the two instruments repricing according to different indices. This is commonly referred to as basis risk.

~~Derivative financial instruments are used to manage interest rate sensitivity. These contracts generally consist of interest rate swaps under which we pay a variable rate (or fixed~~our overall non-maturity deposit rate as ~~the case may be) and receive~~ a ~~fixed rate (or variable rate, as the case may be). In addition, investment securities and wholesale funding strategies are used to manage interest rate risk.~~

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 effectpercentage of the change in the ~~fair value~~targeted federal funds rate, was 19%. A higher deposit beta assumption would indicate a less asset sensitive balance sheet and would lower the expected increase in net interest revenue in the increasing rate scenarios.

The current environment is marked by the most rapid rate increases in decades, which, in part, is making non-bank products, such as U.S. Treasuries and institutional money market funds, more attractive to our deposit customers. For this and other reasons, the banking industry’s deposit base has been shrinking since the first half of 2022. This industry-wide outflow of deposits has increased price competition for bank deposits. As such, industry deposit betas, including ours, have been increasing at a faster pace relative to the ~~derivative financial instrument and~~last rising rate cycle. Our cumulative deposit beta for the ~~offsetting effect of~~current rising rate cycle, while favorable to peer averages, increased to 22% in 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 effective economic hedges. Derivative financial instruments that are not accounted for as accounting hedges are marked to market through earnings.first quarter.

Our policy requires all non-customer derivative financial instruments be used only for asset/liability management through the hedging of specific transactions, positions or risks, and not for trading or speculative purposes. Management believes that the risk associated with using derivative financial instruments to mitigate interest rate risk sensitivity is appropriately monitored and controlled and will not have any material adverse effect on financial condition or results of operations. In order to mitigate potential credit risk, from time to time we may require the counterparties to derivative contracts to pledge cash and/or securities as collateral to cover the net exposure.

Liquidity Management

Liquidity is defined as the ability to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Liquidity management involves maintaining the ability to meet the daily cash flow requirements of customers, both depositors and borrowers. The primary objective is to ensure that sufficient funding is available, at a reasonable cost, to meet ongoing operational cash needs and to take advantage of revenue producing opportunities as they arise. While the desired level of liquidity will vary depending upon a variety of factors, our primary goal is to maintain a sufficient level of liquidity in all expected economic environments. To assist in determining the adequacy of our liquidity, we perform a variety of liquidity stress tests. We maintain an unencumbered liquid asset reserve to help ensure our ability to meet our obligations under normal conditions for at least a 12-month period and under severely adverse liquidity conditions for a minimum of 30 days.

An important part of the Bank’s liquidity resides in the asset portion of the balance sheet, which provides liquidity primarily through loan interest and principal repayments and the maturities and sales of securities, as well as the ability to use these assets as collateral for borrowings on a secured basis.

The Bank’s main source of liquidity is customer interest-bearing and noninterest-bearing deposit accounts. Liquidity is also available from wholesale funding sources consisting primarily of repurchase agreements, Federal funds purchased, FHLB advances, and brokered deposits. These sources of liquidity are generally short-term in nature and are used as necessary to fund asset growth and meet other short-term liquidity needs.

At March 31, 2023, we had sufficient qualifying collateral to provide borrowing capacity for FHLB advances of $1.53 billion, Federal Reserve discount window borrowing capacity of $2.54 billion and Federal Reserve bank term funding program capacity of $1.88 billion. We also had unpledged investment securities of $1.52 billion that could be used as collateral for additional borrowings. In addition, we have the ability to attract retail deposits by competing more aggressively on pricing.

In addition, because the Holding Company is a separate entity and apart from the Bank, it must provide for its own liquidity. The Holding Company is responsible for the payment of dividends declared for its common and preferred shareholders, and interest and principal on any outstanding debt or trust preferred securities. The Holding Company currently has internal capital resources to meet these obligations. While the Holding Company has access to the capital markets and maintains a line of credit as a contingent funding source, the ultimate sources of its liquidity are subsidiary service fees and dividends from the Bank, which are limited by applicable law and regulations. A South Carolina state-chartered bank is permitted to pay a dividend of up to 100% of its current year earnings without requesting approval of the South Carolina Board of Financial Institutions, provided certain conditions are met. Holding

Company liquidity is managed to a minimum of 15-months of anticipated cash expenditures after considering all of its liquidity needs over this period.

At March 31, 2022, we had sufficient qualifying collateral to provide borrowing capacity for FHLB advances of $1.41 billion and Federal Reserve discount window borrowing capacity of $2.05 billion. We also had unpledged investment securities of $4.64 billion that could be used as collateral for additional borrowings. In addition, we have the ability to attract retail deposits by competing more aggressively on pricing.

Significant uses and sources of cash during the three months ended March 31, ~~2022~~2023 are as follows. See the consolidated statement of cash flows for further detail.

•Net cash provided by operating activities of ~~$200~~$90.1 million reflects net income of ~~$48.0~~$62.3 million adjusted for non-cash transactions, gains and losses on sales of securities and other loans, an increase in loans held for sale of $4.70 million and changes in other assets and liabilities. Significant non-cash transactions for the period included a ~~$23.1~~$21.8 million provision for credit losses and net depreciation, amortization, and accretion of ~~$11.4~~$12.1 million.

•Net cash provided by investing activities of $181 million primarily consisted of proceeds from securities sales, maturities and calls of $496 million partially offset by a net increase in loans of $345 million.

•Net cash used in investing activities of $902 million primarily consisted of purchases of AFS and HTM debt securities of $1.15 billion and a net increase in loans of $219 million, partially offset by proceeds from securities sales, maturities and calls of $432 million.

•~~Net cash provided by~~ financing activities of ~~$290~~$141 million was driven by ~~strong deposit growth as our~~ net ~~increase~~repayments of FHLB advances of $615 million and a net decrease in ~~deposits totaled $311~~short-term borrowings of $293 million, ~~which was partially offset by~~combined with dividends on common and preferred stock of ~~$19.9~~$25.4 million, partially offset by an increase in deposits of $793 million.

In the opinion of management, our liquidity position at March 31, ~~2022~~2023 was sufficient to meet our expected cash flow ~~requirements.~~requirements for the foreseeable future.

Capital Resources and Dividends

Shareholders’ equity at March 31, ~~2022~~2023 was ~~$2.70~~$3.08 billion, an increase of ~~$473~~$377 million from December 31, ~~2021~~2022 primarily due to equity issued in the ~~Reliant~~Progress acquisition, ~~and~~ year-to-date earnings and unrealized gains on AFS securities, partially offset by dividends declared on common and ~~unrealized losses on AFS debt securities.~~preferred stock.

The following table shows capital ratios, as calculated under applicable regulatory guidelines, at March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. As of March 31, ~~2022,~~2023, capital levels remained characterized as “well-capitalized” under ~~prompt corrective action provisions~~regulatory requirements in effect at the time. Additional information related to capital ratios is provided in Note 14 to the consolidated financial statements.


Table 14 - Capital Ratios


								United Community Banks, Inc. (Consolidated)				United Community Bank											United Community Banks, Inc. (Consolidated)				United Community Bank
		Minimum		Well- Capitalized		Minimum Capital Plus Capital Conservation Buffer		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021			Minimum		Well- Capitalized		Minimum Capital Plus Capital Conservation Buffer		March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Risk-based ratios:	Risk-based ratios:															Risk-based ratios:
CET1 capital	CET1 capital	4.5	%	6.5	%	7.0	%	11.88	%	12.46	%	12.77	%	12.87	%	CET1 capital	4.5	%	6.5	%	7.0	%	12.08	%	12.26	%	12.43	%	12.83	%
Tier 1 capital	Tier 1 capital	6.0		8.0		8.5		12.46		13.17		12.77		12.87		Tier 1 capital	6.0		8.0		8.5		12.58		12.81		12.43		12.83
Total capital	Total capital	8.0		10.0		10.5		14.34		14.65		13.48		13.46		Total capital	8.0		10.0		10.5		14.40		14.79		13.34		13.70
Leverage ratio	Leverage ratio	4.0		5.0		N/A		8.89		8.75		9.09		8.53		Leverage ratio	4.0		5.0		N/A		9.65		9.69		9.54		9.69

Effect of Inflation and Changing Prices

A bank’s asset and liability structure is substantially different from that of an industrial firm in that primarily all assets and liabilities of a bank are monetary in nature with relatively little investment in fixed assets or inventories. Inflation has an important effect on the growth of total assets and the resulting need to increase equity capital at higher than normal rates in order to maintain an appropriate equity to assets ratio.

Management believes the effect of inflation on financial results depends on our ability to react to changes in interest rates, and by such reaction, reduce the inflationary effect on performance. We have an asset/liability management program to manage interest rate sensitivity. In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

There have been no material changes in our market risk as of March 31, ~~2022~~2023 from that presented in our ~~2021~~2022 10-K. Our interest rate sensitivity position at March 31, ~~2022~~2023 is set forth in Table 13 in MD&A of this Report and incorporated herein by this reference.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)) as of March 31, ~~2022.~~2023. Based on that evaluation, our principal executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in Internal Control Over Financial Reporting. No change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the fiscal quarter ended March 31, ~~2022~~2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, the Holding Company and the Bank are parties to various legal proceedings. Additionally, in the ordinary course of business, the Holding Company and the Bank are subject to regulatory examinations and investigations. Based on our current knowledge and advice of counsel, in the opinion of management there is no such pending or threatened legal matter which would result in a material adverse effect upon our consolidated financial condition or results of operations.

Items 1A. Risk Factors

~~There~~Except with respect to the additional risk factors related to the proposed First Miami acquisition, which are set forth on pages 20 through 26 of the prospectus filed with the SEC on April 24, 2023 pursuant to Securities Act Rule 424(b)(3) (and incorporated herein by this reference), there have been no material changes to the risk factors previously disclosed in the ~~2021 10-K for the fiscal year ended.~~2022 10-K.

Item 6. Exhibits

(d) Exhibits. See Exhibit Index below.


EXHIBIT INDEX

Exhibit No.						Description

2.1						Agreement and Plan of Merger by and between United Community Banks, Inc. and First Miami Bancorp, Inc. dated as of February 13, 2023 (incorporated herein by reference from Exhibit 2.1 to the Current Report on Form 8-K of United Community Banks, Inc. filed with the SEC on February 15, 2023).

3.1						Restated Articles of Incorporation of United Community Banks, Inc. as amended through August 13, 2021 (incorporated herein by reference to Exhibit 3.1 to United Community Bank Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2021, filed on November 5, ~~2021.~~2021).

3.2						Amended and Restated Bylaws of United Community Banks, Inc., as amended (incorporated herein by reference to Exhibit 3.2 to United Community Banks, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, filed with the SEC on May 11, 2015).











31.1						Certification by H. Lynn Harton, President and Chief Executive Officer of United Community Banks, Inc., pursuant to Exchange Act Rule 13a-14(a).

31.2						Certification by Jefferson L. Harralson, Executive Vice President and Chief Financial Officer of United Community Banks, Inc., pursuant to Exchange Act Rule 13a-14(a).

32						Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350.

101						Interactive data files for United Community Bank, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022,~~2023, formatted in Inline XBRL: (i) the Consolidated Balance Sheets (unaudited); (ii) the Consolidated Statements of Income (unaudited); (iii) the Consolidated Statements of Comprehensive Income (unaudited); (iv) the Consolidated Statements in Shareholders’ Equity (unaudited); (v) the Consolidated Statements of Cash Flows (unaudited); and (vi) the Notes to Consolidated Financial Statements (unaudited).













104						The cover page from United Community Bank’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022~~2023 (formatted in Inline XBRL and included in Exhibit 101)

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


			UNITED COMMUNITY BANKS, INC.

			/s/ H. Lynn Harton
			H. Lynn Harton
			President and Chief Executive Officer
			(Principal Executive Officer)

			/s/ Jefferson L. Harralson
			Jefferson L. Harralson
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

			/s/ Alan H. Kumler
			Alan H. Kumler
			Senior Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

			Date: May ~~6, 2022~~5, 2023


Year
Remainder of 2022	$	12,182
2023	12,695
2024	8,162
2025	4,954
2026	2,152
Thereafter	256
Total	$	40,401


	New TDRs											TDRs Modified Within the Previous Twelve Months That Have Subsequently Defaulted
			Post-Modification Amortized Cost by Type of Modification
	Number of Contracts	Rate Reduction			Structure			Other			Total			Number of Contracts	Amortized Cost
Three Months Ended March 31, 2022
Owner occupied commercial real estate	—		$	—		$	—		$	—		$	—	—	$	—
Income producing commercial real estate	—		—			—			—			—		—	—
Commercial & industrial	—		—			—			—			—		—	—
Commercial construction	—		—			—			—			—		—	—
Equipment financing	16		—			1,794			—			1,794		5	107
Total commercial	16		—			1,794			—			1,794		5	107
Residential mortgage	—		—			—			—			—		—	—
HELOC	7		—			1,242			6			1,248		—	—
Residential construction	—		—			—			—			—		—	—
Manufactured housing	—		—			—			—			—		—	—
Consumer	—		—			—			—			—		—	—
Total loans	23		$	—		$	3,036		$	6		$	3,042	5	$	107















Three Months Ended March 31, 2021
Owner occupied commercial real estate	—		$	—		$	—		$	—		$	—	—	$	—
Income producing commercial real estate	2		—			—			1,319			1,319		—	—
Commercial & industrial	2		—			—			103			103		1	11
Commercial construction	1		—			309			—			309		—	—
Equipment financing	28		—			2,136			—			2,136		3	62
Total commercial	33		—			2,445			1,422			3,867		4	73
Residential mortgage	1		—			69			—			69		3	413
HELOC	—		—			—			—			—		—	—

Residential construction	—		—			—			—			—		—	—

Consumer	—		—			—			—			—		—	—
Total loans	34		$	—		$	2,514		$	1,422		$	3,936	7	$	486


Year
Remainder of 2022	$	5,033
2023	5,903
2024	5,018
2025	4,051
2026	3,303
Thereafter	9,798
Total	$	33,106


	March 31, 2022		December 31, 2021		Issue Date	Stated Maturity Date	Earliest Call Date	Interest Rate






2027 senior debentures	35,000		35,000		2015	2027	2025	5.500% through August 2025, 3-month LIBOR plus 3.71% thereafter
2030 senior debentures	100,000		100,000		2020	2030	2025	5.00% through June 2025, 3-month SOFR plus 4.87% thereafter
Total senior debentures	135,000		135,000

2028 subordinated debentures	100,000		100,000		2018	2028	2023	4.500% through January 2023, 3-month LIBOR plus 2.12% thereafter
2029 subordinated debentures	60,000		—		2019	2029	2024	5.125% until December 2024, 3-month SOFR plus 3.765% thereafter
Total subordinated debentures	160,000		100,000


Tidelands Statutory Trust I	8,248		8,248		2006	2036	*	3-month LIBOR plus 1.38%
Four Oaks Statutory Trust I	12,372		12,372		2006	2036	*	3-month LIBOR plus 1.35%
Community First Capital Trust I	3,093		—		2002	2032	*	Prime plus 0.50%
Community First Capital Trust II	5,155		—		2005	2035	*	3-month LIBOR plus 1.50%
Community First Capital Trust III	5,464		—		2007	2037	*	3-month LIBOR plus 3.00%
Total trust preferred securities	34,332		20,620
Less net discount	(5,102)		(8,260)
Total long-term debt	$	324,230	$	247,360


	Three Months Ended March 31, 2022
	Compared to 2021 Increase (Decrease) Due to Changes in
	Volume		Rate		Total
Interest-earning assets:
Loans (FTE)	$	29,204	$	(7,689)	$	21,515
Taxable securities	7,768		(56)		7,712
Tax-exempt securities (FTE)	1,581		(903)		678
Federal funds sold and other interest-earning assets	390		(592)		(202)
Total interest-earning assets (FTE)	38,943		(9,240)		29,703

Interest-bearing liabilities:
NOW and interest-bearing demand accounts	495		(512)		(17)
Money market accounts	515		(1,307)		(792)
Savings deposits	22		1		23
Time deposits	105		(1,159)		(1,054)
Brokered deposits	14		(262)		(248)
Total interest-bearing deposits	1,151		(3,239)		(2,088)

Federal funds purchased & other borrowings	—		—		—
FHLB advances	(2)		—		(2)
Long-term debt	24		(145)		(121)
Total borrowed funds	22		(145)		(123)
Total interest-bearing liabilities	1,173		(3,384)		(2,211)

Increase in net interest revenue (FTE)	$	37,770	$	(5,856)	$	31,914


	March 31, 2022			December 31, 2021












Nonaccrual loans HFI	37,944			32,812
Nonaccrual loans held for sale	2,033			—
OREO and repossessed assets	839			43
Total NPAs	$	40,816		$	32,855

Nonaccrual loans HFI as a percentage of total loans HFI	0.27		%	0.28		%

NPAs as a percentage of total assets	0.17			0.16