United Community Banks Inc.

08/08/2025 | Press release | Distributed by Public on 08/08/2025 09:48

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion of our financial condition at June 30, 2025 and December 31, 2024 and our results of operations for the three and six months ended June 30, 2025 and 2024. 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 2024 10-K and the other reports we have filed with the SEC after we filed the 2024 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 solutions through a network of 200 banking offices in Georgia, South Carolina, North Carolina, Tennessee, Florida and Alabama. Our equipment finance and SBA/USDA lending businesses operate throughout the United States. At June 30, 2025, we had consolidated total assets of $28.1 billion and 3,050 full-time equivalent employees.
Recent Developments
On May 1, 2025, we completed the acquisition of ANB, which was headquartered in Oakland Park, Florida where it operated one banking location. We acquired $447 million of assets, including goodwill, and assumed $381 million of liabilities in the acquisition, which included $301 million in loans and $374 million in deposits. Our operating results for the three and six months ended June 30, 2025 include ANB's operating results for the period subsequent to the acquisition date.
On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act, which includes a broad range of tax reform provisions affecting businesses. Of note, the 21% corporate tax rate provided by the Tax Cuts and Jobs Act of 2017, which was scheduled to sunset on December 31, 2025, was made permanent with the passing of this law.
Results of Operations
We reported net income and diluted earnings per common share of $78.7 million and $0.63, respectively, for the second quarter of 2025, compared to $66.6 million and $0.54, respectively, for the same period in 2024. For the six months ended June 30, 2025 and 2024, we reported net income of $150 million and $129 million, respectively, and diluted earnings per common share of $1.21 and $1.05, respectively.
Net interest revenue for the second quarter and first half of 2025 was $226 million and $438 million, respectively, compared to $209 million and $408 million, respectively, for the same periods of 2024. The increase in net interest revenue was mostly driven by lower deposit interest expense.
Net interest margin for the second quarter and first half of 2025 increased to 3.50% and 3.43%, respectively, from 3.37% and 3.28%, respectively, for the comparative 2024 periods. The increases in net interest margin were primarily due to the larger decrease in interest rates paid on deposits compared to the decrease in interest rates earned on loans.
We recorded a provision for credit losses of $11.8 million and $27.2 million for the second quarter and first half of 2025, respectively, which included $2.49 million for the initial ACL for ANB non-PCD loans and unfunded commitments. Provision expense for the comparative periods of 2024 was $12.2 million and $25.1 million.
Noninterest income of $34.7 million and $70.4 million for the second quarter and first half of 2025 decreased by $1.85 million and $5.78 million, respectively, compared to the same periods of 2024. The decrease was mostly driven by negative fair value adjustments to our mortgage servicing asset and a decrease in wealth management fees. The decrease in wealth management fees is reflective of the decrease in assets under management following the sale of FinTrust in the fourth quarter of 2024.
Noninterest expense of $148 million and $289 million in the second quarter and first six months of 2025 were relatively consistent with the expense reported for the comparative periods of 2024. The three and six months of 2025 included ANB merger-related expense and higher communications and equipment expense, while the comparative periods of 2024 included a $5.10 million goodwill write-down related to the sale of FinTrust.
Results for the second quarter and first six months of 2025 are discussed in further detail throughout the following sections of MD&A.
Critical Accounting Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Our accounting and reporting estimates are in accordance with GAAP and conform to customary practices within the banking industry. Estimates that are susceptible to significant changes include accounting for the ACL and fair value measurements, both of which require significant judgments by management. Actual results could differ significantly from those estimates. Also, different assumptions in the application of these accounting estimates could result in material changes in our consolidated financial position or consolidated results of operations. Our critical accounting estimates are discussed in MD&A in our 2024 10-K.
Non-GAAP Reconciliation and Explanation
This Report contains financial information determined by methods other than in accordance with GAAP. Such non-GAAP financial information includes the following measures: "tangible book value per common share," and "tangible common equity to tangible assets." In addition, management presents non-GAAP operating performance measures, which exclude merger-related and other items that are not part of our ongoing business operations. Operating performance measures include "noninterest income - operating," "noninterest expense - operating," "net income - operating," "diluted income per common share - operating," "tangible book value per common share," "return on common equity - operating," "return on tangible common equity - operating," "return on assets - operating," "efficiency ratio - operating" and "tangible common equity to tangible assets" We have developed internal policies and procedures to accurately capture and account for merger-related and other charges 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.
UNITED COMMUNITY BANKS, INC.
Table 1 - Financial Highlights
(dollars in thousands, except per share data) 2025 2024
Second Quarter
2025 - 2024 Change
For the Six Months Ended June 30, YTD Change
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
2025 2024
INCOME SUMMARY
Interest revenue $ 347,365 $ 335,357 $ 344,962 $ 349,086 $ 346,965 $ 682,722 $ 683,693
Interest expense 121,834 123,336 134,629 139,900 138,265 245,170 275,844
Net interest revenue 225,531 212,021 210,333 209,186 208,700 8 % 437,552 407,849 7 %
Noninterest income 34,708 35,656 40,522 8,091 36,556 (5) 70,364 76,143 (8)
Total revenue 260,239 247,677 250,855 217,277 245,256 6 507,916 483,992 5
Provision for credit losses 11,818 15,419 11,389 14,428 12,235 (3) 27,237 25,134 8
Noninterest expense 147,919 141,099 143,056 143,065 147,044 1 289,018 292,046 (1)
Income before income tax expense 100,502 91,159 96,410 59,784 85,977 17 191,661 166,812 15
Income tax expense 21,769 19,746 20,606 12,437 19,362 12 41,515 37,566 11
Net income 78,733 71,413 75,804 47,347 66,615 18 150,146 129,246 16
Non-operating items 4,833 1,297 2,203 29,385 6,493 n/m 6,130 8,680 n/m
Income tax benefit of non-operating items (1,047) (281) (471) (6,276) (1,462) n/m (1,328) (1,955) n/m
Net income - operating (1)
$ 82,519 $ 72,429 $ 77,536 $ 70,456 $ 71,646 15 $ 154,948 $ 135,971 14
PERFORMANCE MEASURES
Per common share:
Diluted net income - GAAP $ 0.63 $ 0.58 $ 0.61 $ 0.38 $ 0.54 17 $ 1.21 $ 1.05 15
Diluted net income - operating (1)
0.66 0.59 0.63 0.57 0.58 14 1.25 1.10 14
Cash dividends declared 0.24 0.24 0.24 0.24 0.23 4 0.48 0.46 4
Book value 28.89 28.42 27.87 27.68 27.18 6 28.89 27.18 6
Tangible book value (3)
21.00 20.58 20.00 19.66 19.13 10 21.00 19.13 10
Key performance ratios:
Return on common equity - GAAP (2)(4)
8.45 % 7.89 % 8.40 % 5.20 % 7.53 % 8.18 % 7.34 %
Return on common equity - operating (1)(2)(4)
8.87 8.01 8.60 7.82 8.12 8.45 7.73
Return on tangible common equity - operating(1)(2)(3)(4)
12.34 11.21 12.12 11.17 11.68 11.78 11.18
Return on assets - GAAP (4)
1.11 1.02 1.06 0.67 0.97 1.06 0.94
Return on assets - operating (1)(4)
1.16 1.04 1.08 1.01 1.04 1.10 0.99
Net interest margin (FTE) (4)
3.50 3.36 3.26 3.33 3.37 3.43 3.28
Efficiency ratio - GAAP 56.69 56.74 56.05 65.51 59.70 56.71 60.08
Efficiency ratio - operating (1)
54.84 56.22 55.18 57.37 57.06 55.51 58.08
Equity to total assets 12.86 12.56 12.38 12.45 12.35 12.86 12.35
Tangible common equity to tangible assets (3)
9.45 9.18 8.97 8.93 8.78 9.45 8.78
ASSET QUALITY
NPAs $ 83,959 $ 93,290 $ 115,635 $ 114,960 $ 116,722 (28) $ 83,959 $ 116,722 (28)
ACL - loans 216,500 211,974 206,998 205,290 213,022 2 216,500 213,022 2
Net charge-offs 8,225 9,607 9,517 23,651 11,614 n/m 17,832 24,522 n/m
ACL - loans to loans 1.14 % 1.15 % 1.14 % 1.14 % 1.17 % 1.14 % 1.17 %
Net charge-offs to average loans (4)
0.18 0.21 0.21 0.52 0.26 0.20 0.27
NPAs to total assets 0.30 0.33 0.42 0.42 0.43 0.30 0.43
AT PERIOD END ($ in millions)
Loans $ 18,921 $ 18,425 $ 18,176 $ 17,964 $ 18,211 4 $ 18,921 $ 18,211 4
Investment securities 6,382 6,661 6,804 6,425 6,038 6 6,382 6,038 6
Total assets 28,086 27,874 27,720 27,373 27,057 4 28,086 27,057 4
Deposits 23,963 23,762 23,461 23,253 22,982 4 23,963 22,982 4
Shareholders' equity 3,613 3,501 3,432 3,407 3,343 8 3,613 3,343 8
Common shares outstanding (thousands) 121,431 119,514 119,364 119,283 119,175 2 121,431 119,175 2
(1) Excludes non-operating items as detailed on Non-GAAP Performance Measures Reconciliation on next page. (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.
UNITED COMMUNITY BANKS, INC.
Table 1 (Continued) - Financial Highlights
Non-GAAP Performance Measures Reconciliation
(dollars in thousands, except per share data)
2025 2024 For the Six Months Ended June 30,
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
2025 2024
Noninterest income reconciliation
Noninterest income (GAAP) $ 34,708 $ 35,656 $ 40,522 $ 8,091 $ 36,556 $ 70,364 $ 76,143
Loss on sale of manufactured housing loans - - - 27,209 - - -
Gain on lease termination - - - - - - (2,400)
Noninterest income - operating $ 34,708 $ 35,656 $ 40,522 $ 35,300 $ 36,556 $ 70,364 $ 73,743
Noninterest expense reconciliation
Noninterest expense (GAAP) $ 147,919 $ 141,099 $ 143,056 $ 143,065 $ 147,044 $ 289,018 $ 292,046
Loss on FinTrust (goodwill impairment) - - - - (5,100) - (5,100)
FDIC special assessment - - - - 764 - (1,736)
Merger-related and other charges (4,833) (1,297) (2,203) (2,176) (2,157) (6,130) (4,244)
Noninterest expense - operating $ 143,086 $ 139,802 $ 140,853 $ 140,889 $ 140,551 $ 282,888 $ 280,966
Net income to operating income reconciliation
Net income (GAAP) $ 78,733 $ 71,413 $ 75,804 $ 47,347 $ 66,615 $ 150,146 $ 129,246
Loss on sale of manufactured housing loans - - - 27,209 - - -
Gain on lease termination - - - - - - (2,400)
Loss on FinTrust (goodwill impairment) - - - - 5,100 - 5,100
FDIC special assessment - - - - (764) - 1,736
Merger-related and other charges 4,833 1,297 2,203 2,176 2,157 6,130 4,244
Income tax benefit of non-operating items (1,047) (281) (471) (6,276) (1,462) (1,328) (1,955)
Net income - operating $ 82,519 $ 72,429 $ 77,536 $ 70,456 $ 71,646 $ 154,948 $ 135,971
Diluted income per common share reconciliation
Diluted income per common share (GAAP) $ 0.63 $ 0.58 $ 0.61 $ 0.38 $ 0.54 $ 1.21 $ 1.05
Loss on sale of manufactured housing loans - - - 0.18 - - -
Gain on lease termination - - - - - - (0.02)
Loss on FinTrust (goodwill impairment) - - - - 0.03 - 0.03
FDIC special assessment - - - - - - 0.02
Merger-related and other charges 0.03 0.01 0.02 0.01 0.01 0.04 0.02
Diluted income per common share - operating $ 0.66 $ 0.59 $ 0.63 $ 0.57 $ 0.58 $ 1.25 $ 1.10
Book value per common share reconciliation
Book value per common share (GAAP) $ 28.89 $ 28.42 $ 27.87 $ 27.68 $ 27.18 $ 28.89 $ 27.18
Effect of goodwill and other intangibles (7.89) (7.84) (7.87) (8.02) (8.05) (7.89) (8.05)
Tangible book value per common share $ 21.00 $ 20.58 $ 20.00 $ 19.66 $ 19.13 $ 21.00 $ 19.13
Return on tangible common equity reconciliation
Return on common equity (GAAP) 8.45 % 7.89 % 8.40 % 5.20 % 7.53 % 8.18 % 7.34 %
Loss on sale of manufactured housing loans - - - 2.43 - - -
Gain on lease termination - - - - - - (0.11)
Loss on FinTrust (goodwill impairment) - - - - 0.46 - 0.23
FDIC special assessment - - - - (0.07) - 0.08
Merger-related and other charges 0.42 0.12 0.20 0.19 0.20 0.27 0.19
Return on common equity - operating 8.87 8.01 8.60 7.82 8.12 8.45 7.73
Effect of goodwill and other intangibles 3.47 3.20 3.52 3.35 3.56 3.33 3.45
Return on tangible common equity - operating 12.34 % 11.21 % 12.12 % 11.17 % 11.68 % 11.78 % 11.18 %
UNITED COMMUNITY BANKS, INC.
Table 1 (Continued) - Financial Highlights
Non-GAAP Performance Measures Reconciliation
(dollars in thousands, except per share data)
2025 2024 For the Six Months Ended June 30,
Second Quarter
First Quarter
Fourth Quarter
Third Quarter
Second Quarter
2025 2024
Return on assets reconciliation
Return on assets (GAAP) 1.11 % 1.02 % 1.06 % 0.67 % 0.97 % 1.06 % 0.94 %
Loss on sale of manufactured housing loans - - - 0.31 - - -
Gain on lease termination - - - - - - (0.01)
Loss on FinTrust (goodwill impairment) - - - - 0.06 - 0.03
FDIC special assessment - - - - (0.01) - 0.01
Merger-related and other charges 0.05 0.02 0.02 0.03 0.02 0.04 0.02
Return on assets - operating 1.16 % 1.04 % 1.08 % 1.01 % 1.04 % 1.10 % 0.99 %
Efficiency ratio reconciliation
Efficiency ratio (GAAP) 56.69 % 56.74 % 56.05 % 65.51 % 59.70 % 56.71 % 60.08 %
Loss on sale of manufactured housing loans - - - (7.15) - - -
Gain on lease termination - - - - - - 0.29
Loss on FinTrust (goodwill impairment) - - - - (2.07) - (1.05)
FDIC special assessment - - - - 0.31 - (0.36)
Merger-related and other charges (1.85) (0.52) (0.87) (0.99) (0.88) (1.20) (0.88)
Efficiency ratio - operating 54.84 % 56.22 % 55.18 % 57.37 % 57.06 % 55.51 % 58.08 %
Tangible common equity to tangible assets reconciliation
Equity to total assets (GAAP) 12.86 % 12.56 % 12.38 % 12.45 % 12.35 % 12.86 % 12.35 %
Effect of goodwill and other intangibles (3.10) (3.06) (3.09) (3.20) (3.24) (3.10) (3.24)
Effect of preferred equity (0.31) (0.32) (0.32) (0.32) (0.33) (0.31) (0.33)
Tangible common equity to tangible assets 9.45 % 9.18 % 8.97 % 8.93 % 8.78 % 9.45 % 8.78 %
Net Interest Revenue
For the quarter:
FTE net interest revenue for the second quarter of 2025 was $227 million, an increase of $16.8 million from the same period in 2024. Net interest-rate spread and net interest margin were 2.62% and 3.50%, respectively, which were up 30 basis points and 13 basis points, respectively, compared to the second quarter of 2024. The interest rate changes during the past year included cuts of 100 basis points in the federal funds rate, which drove decreases in funding costs, and to a lesser extent, loan yields.
For the six months ended:
FTE net interest revenue for the first six months of 2025 and 2024 was $440 million and $410 million, respectively. During the first six months of 2025, our net interest spread increased 31 basis points and our net interest margin increased by 15 basis points compared to the same period of 2024. Changes in net interest revenue and related metrics for the six months ended 2025 were a result of the same factors affecting the quarter.
Table 2 - Average Consolidated Balance Sheets and Net Interest Analysis
For the Three Months Ended June 30,
(dollars in thousands, (FTE))
2025 2024
Average Balance Interest Average Rate Average Balance Interest Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)
$ 18,664,228 $ 288,023 6.19 % $ 18,213,384 $ 291,378 6.43 %
Taxable securities(3)
6,492,288 54,191 3.34 5,952,414 48,364 3.25
Tax-exempt securities (FTE) (1)(3)
354,162 2,236 2.53 363,393 2,273 2.50
Federal funds sold and other interest-earning assets 451,953 3,898 3.46 499,565 6,011 4.84
Total interest-earning assets (FTE) 25,962,631 348,348 5.38 25,028,756 348,026 5.59
Noninterest-earning assets:
Allowance for credit losses (220,059) (215,104)
Cash and due from banks 203,909 204,792
Premises and equipment 398,241 392,325
Other assets (3)
1,637,125 1,605,558
Total assets $ 27,981,847 $ 27,016,327
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand $ 6,051,489 36,956 2.45 $ 5,866,038 43,910 3.01
Money market 6,645,336 49,603 2.99 6,068,530 53,531 3.55
Savings 1,195,295 1,457 0.49 1,160,708 687 0.24
Time 3,532,848 30,596 3.47 3,544,327 35,695 4.05
Brokered time deposits 50,488 524 4.16 50,323 639 5.11
Total interest-bearing deposits 17,475,456 119,136 2.73 16,689,926 134,462 3.24
Federal funds purchased and other borrowings 7,412 83 4.49 4,093 60 5.90
Federal Home Loan Bank advances - - - - - -
Long-term debt 237,992 2,615 4.41 324,870 3,743 4.63
Total borrowed funds 245,404 2,698 4.41 328,963 3,803 4.65
Total interest-bearing liabilities 17,720,860 121,834 2.76 17,018,889 138,265 3.27
Noninterest-bearing liabilities:
Noninterest-bearing deposits 6,351,540 6,283,487
Other liabilities 346,643 400,974
Total liabilities 24,419,043 23,703,350
Shareholders' equity 3,562,804 3,312,977
Total liabilities and shareholders' equity $ 27,981,847 $ 27,016,327
Net interest revenue (FTE) $ 226,514 $ 209,761
Net interest-rate spread (FTE) 2.62 % 2.32 %
Net interest margin (FTE) (4)
3.50 % 3.37 %
(1)Interest revenue on tax-exempt securities and loans includes a taxable-equivalent adjustment to reflect comparable interest on taxable securities and loans. The FTE adjustment totaled $983,000 and $1.06 million, respectively, for the three months ended June 30, 2025 and 2024. The tax rate used to calculate the adjustment was 25%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3)Unrealized losses on AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $240 million in 2025 and $344 million in 2024 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.
Table 3 - Average Consolidated Balance Sheets and Net Interest Analysis
For the Six Months Ended June 30,
(dollars in thousands, (FTE))
2025 2024
Average Balance Interest Average Rate Average Balance Interest Average Rate
Assets:
Interest-earning assets:
Loans, net of unearned income (FTE) (1)(2)
$ 18,440,110 $ 561,953 6.15 % $ 18,256,562 $ 575,338 6.34 %
Taxable securities (3)
6,614,294 111,363 3.37 5,890,408 93,079 3.16
Tax-exempt securities (FTE)(1)(3)
355,430 4,481 2.52 364,873 4,584 2.51
Federal funds sold and other interest-earning assets 426,415 6,899 3.26 587,080 12,816 4.39
Total interest-earning assets (FTE) 25,836,249 684,696 5.34 25,098,923 685,817 5.49
Non-interest-earning assets:
Allowance for loan losses (215,141) (214,050)
Cash and due from banks 211,681 212,998
Premises and equipment 397,347 389,173
Other assets (3)
1,623,689 1,611,928
Total assets $ 27,853,825 $ 27,098,972
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
NOW and interest-bearing demand $ 6,092,519 74,346 2.46 $ 5,972,065 90,121 3.03
Money market 6,614,819 99,144 3.02 5,966,374 104,009 3.51
Savings 1,146,075 2,081 0.37 1,176,768 1,393 0.24
Time 3,489,687 61,427 3.55 3,570,407 71,639 4.03
Brokered time deposits 50,468 1,072 4.28 50,333 1,084 4.33
Total interest-bearing deposits 17,393,568 238,070 2.76 16,735,947 268,246 3.22
Federal funds purchased and other borrowings 43,883 1,190 5.47 2,054 60 5.87
Federal Home Loan Bank advances 19,343 433 4.51 2 - -
Long-term debt 246,061 5,477 4.49 324,854 7,538 4.67
Total borrowed funds 309,287 7,100 4.63 326,910 7,598 4.67
Total interest-bearing liabilities 17,702,855 245,170 2.79 17,062,857 275,844 3.25
Noninterest-bearing liabilities:
Noninterest-bearing deposits 6,273,313 6,340,783
Other liabilities 358,227 395,713
Total liabilities 24,334,395 23,799,353
Shareholders' equity 3,519,430 3,299,619
Total liabilities and shareholders' equity $ 27,853,825 $ 27,098,972
Net interest revenue (FTE) $ 439,526 $ 409,973
Net interest-rate spread (FTE) 2.55 % 2.24 %
Net interest margin (FTE) (4)
3.43 % 3.28 %
(1)Interest revenue on tax-exempt securities and loans includes a taxable-equivalent adjustment to reflect comparable interest on taxable securities and loans. The FTE adjustment totaled $1.97 million and $2.12 million, respectively, for the six months ended June 30, 2025 and 2024. The tax rate used to calculate the adjustment was 25%, reflecting the statutory federal income tax rate and the federal tax adjusted state income tax rate.
(2)Included in the average balance of loans outstanding are loans on which the accrual of interest has been discontinued and loans that are held for sale.
(3)Unrealized gains and losses on AFS securities, including those related to the transfer from AFS to HTM, have been reclassified to other assets. Pretax unrealized losses of $254 million and $333 million in 2025 and 2024, 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.
Noninterest Income
The following table presents the components of noninterest income for the periods indicated.
Table 4 - Noninterest Income
(dollars in thousands)
Three Months Ended
June 30, 		Change Six Months Ended
June 30, 		Change
2025 2024 Amount Percent 2025 2024 Amount Percent
Service charges and fees:
Overdraft fees $ 3,294 $ 3,374 $ (80) (2) % $ 6,321 $ 6,374 $ (53) (1) %
ATM and debit card fees 3,979 3,939 40 1 7,755 7,444 311 4
Other service charges and fees 2,849 3,307 (458) (14) 5,581 6,066 (485) (8)
Total service charges and fees 10,122 10,620 (498) (5) 19,657 19,884 (227) (1)
Mortgage loan gains and related fees 5,370 6,799 (1,429) (21) 11,492 14,310 (2,818) (20)
Wealth management fees 4,400 6,386 (1,986) (31) 8,865 12,699 (3,834) (30)
Gains on sales of other loans 1,995 1,296 699 54 3,391 2,833 558 20
Lending and loan servicing fees 3,690 3,328 362 11 7,855 7,538 317 4
Securities gains, net 286 - 286 n/m 292 - 292 n/m
Other noninterest income:
Customer derivative fees 905 199 706 n/m 2,157 438 1,719 n/m
Other investment income (333) 1,845 (2,178) n/m 71 2,948 (2,877) n/m
BOLI 2,026 1,909 117 6 4,135 4,804 (669) (14)
Treasury management income 1,975 1,691 284 17 3,958 3,188 770 24
Other 4,272 2,483 1,789 72 8,491 7,501 990 13
Total other noninterest income 8,845 8,127 718 9 18,812 18,879 (67) -
Total noninterest income $ 34,708 $ 36,556 $ (1,848) (5) $ 70,364 $ 76,143 $ (5,779) (8)
The decrease in mortgage loan gains and related fees for the three and six months ended June 30, 2025 compared to the same periods of 2024 was primarily a result of negative fair value adjustments to our mortgage servicing asset which were less favorable by $1.40 million and $2.98 million, respectively, compared to the fair value adjustments for the comparable periods of 2024. This decrease was partially offset by higher gains on mortgage sales and rate lock volume. The following table provides additional mortgage metrics for the periods indicated.
Table 5 - Mortgage Loan Metrics
(dollars in thousands)
Three Months Ended
June 30, 		Six Months Ended
June 30,
2025 2024 % Change 2025 2024 % Change
Mortgage rate locks $ 359,348 $ 294,935 22 % $ 689,838 $ 554,512 24 %
Mortgage loans sold $ 175,256 $ 144,651 21 $ 316,161 $ 270,590 17
Mortgage loans originated:
Purchases $ 251,504 $ 191,060 32 $ 414,867 $ 339,285 22
Refinances 33,526 23,791 41 57,395 46,551 23
Total $ 285,030 $ 214,851 33 $ 472,262 $ 385,836 22
The decrease in wealth management fees reflects the decrease in assets under management and advisement as a result of the FinTrust sale in the fourth quarter of 2024. Assets under management and advisement totaled $3.29 billion and $5.30 billion at June 30, 2025 and 2024, respectively.
Customer derivative fees for the three and six months ended June 30, 2025 were up due to stronger loan growth and increased product demand, attributable to the lower rates compared to the same periods of 2024.
The decrease in other investment income was primarily driven by weaker market conditions for the 2025 reporting periods, particularly related to our mutual fund and fintech investments.
The increase in other noninterest income was largely driven by a positive change in collateral charges related to derivative positions.
Provision for Credit Losses
We recorded a provision for credit losses of $11.8 million and $27.2 million for the three and six months ended June 30, 2025, compared to $12.2 million and $25.1 million for the same periods of 2024. For the three and six months ended June 30, 2025, the provision for credit losses included the initial provision for ANB's non-PCD loans and unfunded commitments of $2.49 million. Additional discussion on credit quality and the ACL is included in the "Asset Quality and Risk Elements" section of MD&A in this Report.
Noninterest Expense
The following table presents the components of noninterest expense for the periods indicated.
Table 6 - Noninterest Expense
(dollars in thousands)
Three Months Ended
June 30, 		Change Six Months Ended
June 30, 		Change
2025 2024 Amount Percent 2025 2024 Amount Percent
Salaries and employee benefits $ 86,997 $ 85,818 $ 1,179 1 % $ 171,264 $ 170,803 $ 461 - %
Communications and equipment 13,332 11,988 1,344 11 27,031 23,908 3,123 13
Occupancy 10,935 11,056 (121) (1) 21,864 22,155 (291) (1)
Advertising and public relations 2,881 2,459 422 17 4,762 4,360 402 9
Postage, printing and supplies 2,495 2,251 244 11 5,056 4,899 157 3
Professional fees 5,609 6,044 (435) (7) 11,540 12,032 (492) (4)
Lending and loan servicing expense 2,330 2,014 316 16 4,317 3,841 476 12
Outside services - electronic banking 3,570 2,812 758 27 6,333 5,730 603 11
FDIC assessments and other regulatory charges 4,745 4,467 278 6 9,387 12,033 (2,646) (22)
Amortization of intangibles 3,292 3,794 (502) (13) 6,578 7,681 (1,103) (14)
Merger-related and other charges 4,833 2,157 2,676 n/m 6,130 4,244 1,886 n/m
Other 6,900 12,184 (5,284) (43) 14,756 20,360 (5,604) (28)
Total noninterest expense $ 147,919 $ 147,044 $ 875 1 $ 289,018 $ 292,046 $ (3,028) (1)
Communications and equipment expense for the second quarter and first half of 2025 compared to the same periods of 2024 increased primarily due to new software contracts and incremental software contract costs on existing contracts, including volume based increases.
The increase in outside services - electronic banking reflects both volume-based cost increases and enhancements to our digital banking solutions.
FDIC assessments and other regulatory charges decreased for the first six months of 2025 as the comparative period of 2024 included $1.74 million of FDIC special assessment accrued expense.
The decrease in amortization of intangibles was primarily driven by the natural decline in amortization expense of our core deposit intangibles over time. This decrease was partially offset by ANB core deposit intangible amortization expense starting in May 2025.
The increase in merger-related and other charges for the second quarter and first half of 2025 was primarily driven by ANB merger-related costs.
Other noninterest expense for the three and six months ended 2025 was down compared to the same periods of last year as 2024 included a goodwill write-down of $5.10 million related to the sale of FinTrust.
Income Tax Expense
The following table presents income tax expense and the effective tax rate for the periods indicated.
Table 7 - Income Tax Expense
(dollars in thousands)
Three Months Ended
June 30, 		For the Six Months Ended June 30,
2025 2024 2025 2024
Income before income taxes $ 100,502 $ 85,977 $ 191,661 $ 166,812
Income tax expense 21,769 19,362 41,515 37,566
Effective tax rate 21.7 % 22.5 % 21.7 % 22.5 %
Balance Sheet Review
Total assets at June 30, 2025 and December 31, 2024 were $28.1 billion and $27.7 billion, respectively. Total liabilities at June 30, 2025 and December 31, 2024 were $24.5 billion and $24.3 billion, respectively. Shareholders' equity totaled $3.61 billion and $3.43 billion at June 30, 2025 and December 31, 2024, respectively.
Loans
Our loan portfolio is our largest category of interest-earning assets. The following table presents the loan portfolio and the allocation of the ACL by loan type for the periods indicated.
Table 8 - Loan Portfolio Composition and ACL Allocation
(dollars in thousands)
June 30, 2025 December 31, 2024
Loans % of portfolio ACL ACL to Loans Loans % of portfolio ACL ACL to Loans
Owner occupied CRE $ 3,563,126 19 % $ 20,967 0.59 % $ 3,398,217 19 % $ 19,873 0.58 %
Income producing CRE 4,548,235 24 49,072 1.08 4,360,920 24 41,427 0.95
Commercial & industrial 2,515,360 13 38,693 1.54 2,428,376 13 35,441 1.46
Commercial construction 1,751,850 10 15,979 0.91 1,655,710 9 16,370 0.99
Equipment financing 1,777,936 9 47,900 2.69 1,662,501 9 47,415 2.85
Total commercial 14,156,507 75 172,611 1.22 13,505,724 74 160,526 1.19
Residential mortgage 3,210,430 17 30,217 0.94 3,231,479 18 32,259 1.00
Home equity 1,180,455 6 10,812 0.92 1,064,874 6 11,247 1.06
Residential construction 173,829 1 1,812 1.04 178,405 1 1,672 0.94
Manufactured housing(2)
- - - - 1,723 - 450 26.12
Consumer 190,958 1 1,048 0.55 186,448 1 844 0.45
Total (1)
$ 18,912,179 $ 216,500 1.14 $ 18,168,653 $ 206,998 1.14
(1) Loans presented exclude fair value hedge basis adjustments.
(2)In 2025, manufactured housing loans were included in consumer loans.
The following table provides a disaggregation of our income producing CRE portfolio as of June 30, 2025 and December 31, 2024.
Table 9 - CRE - Income Producing Portfolio Composition
(dollars in thousands)
June 30, 2025 December 31, 2024
Total
% of loans in category
Total
% of loans in category
Retail $ 865,274 19 % $ 765,987 18 %
Office 823,711 18 792,449 18
Multifamily 590,291 13 633,296 15
Warehouse 544,620 12 502,586 11
Other 517,332 11 475,898 11
Hotel 501,473 11 467,139 11
Rental 1-4 Family 327,484 7 326,286 7
Senior Care 219,986 5 259,056 6
Self Storage 158,064 4 138,223 3
Total
$ 4,548,235 100 % $ 4,360,920 100 %
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.
The ACL reflects our assessment of the life of loan expected credit losses in the loan portfolio and unfunded loan commitments. This assessment involves uncertainty and judgment and is subject to change in future periods. See the Critical Accounting Estimatessection of MD&A in our 2024 10-K for additional information on the ACL.
The ACL for loans at June 30, 2025 totaled $217 million compared to $207 million at December 31, 2024. The ACL for loans as a percentage of total loans remained flat at 1.14%. The increase in the ACL was primarily attributable to loan growth and the initial allowance established for ANB, partially offset by a reduction in the Hurricane Helene related allowance based on our latest assessment of potential storm related-loan losses. The initial ACL for ANB loans totaled $3.65 million, $1.25 million of which was reclassified from the fair value of PCD loans with no impact to earnings. The Hurricane Helene related reserve totaled $4.42 million and $9.80 million at June 30, 2025 and December 31, 2024, respectively. Our ACL for unfunded commitments, which totaled $11.5 million, increased $1.15 million compared to December 31, 2024 mostly due to an increase in our construction commitments.
The following table provides a summary of net charge-offs to average loans for the periods indicated.
Table 10 - Net Charge-offs to Average Loans
(dollars in thousands)
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Net charge-offs (recoveries)
Owner occupied CRE $ 470 $ 163 $ 596 $ 365
Income producing CRE 933 2,968 1,651 3,173
Commercial & industrial 1,027 1,281 3,474 5,187
Commercial construction 89 (48) (49) (28)
Equipment financing 4,963 5,502 10,005 11,864
Residential mortgage 313 (107) 312 (123)
Home equity (72) (27) (134) (81)
Residential construction (9) 26 210 145
Manufactured housing - 1,150 - 2,719
Consumer 511 706 1,767 1,301
Total net charge-offs $ 8,225 $ 11,614 $ 17,832 $ 24,522
Average loans
Owner occupied CRE $ 3,492,599 $ 3,288,757 $ 3,438,970 $ 3,283,715
Income producing CRE 4,488,186 4,113,743 4,451,373 4,168,985
Commercial & industrial 2,507,891 2,341,253 2,479,055 2,371,413
Commercial construction 1,744,511 1,966,053 1,701,888 1,929,485
Equipment financing 1,723,360 1,555,641 1,689,191 1,547,562
Residential mortgage 3,214,776 3,238,225 3,219,652 3,224,620
Home equity 1,134,274 972,630 1,100,224 967,075
Residential construction 174,030 233,317 175,716 256,031
Manufactured housing - 322,998 - 327,220
Consumer 184,601 180,767 184,041 180,456
Total average loans $ 18,664,228 $ 18,213,384 $ 18,440,110 $ 18,256,562
Net charge-offs to average loans (1)
Owner occupied CRE 0.05 % 0.02 % 0.03 % 0.02 %
Income producing CRE 0.08 0.29 0.07 0.15
Commercial & industrial 0.16 0.22 0.28 0.44
Commercial construction 0.02 (0.01) (0.01) -
Equipment financing 1.16 1.42 1.19 1.54
Residential mortgage 0.04 (0.01) 0.02 (0.01)
Home equity (0.03) (0.01) (0.02) (0.02)
Residential construction (0.02) 0.04 0.24 0.11
Manufactured housing - 1.43 - 1.67
Consumer 1.11 1.57 1.94 1.45
Total 0.18 0.26 0.20 0.27
(1)Annualized.
We completed the sale of substantially all of our manufactured housing loan portfolio in the third quarter of 2024. For the second quarter and first six months of 2025, the average balance and net charge-offs related to the remaining manufactured housing loans are reflected in consumer loans. Equipment finance charge-offs for the three months ended June 30, 2025 decreased compared to the same period in 2024 due to lower long-haul trucking related losses.
Nonperforming Assets
The table below summarizes NPAs for the periods indicated. NPAs include nonaccrual loans, OREO and repossessed assets. The decrease in NPAs since December 31, 2024 was primarily driven by $49.6 million in payoffs and paydowns of nonaccrual loans. Notably, we had two payoffs of senior care loans (included in income producing CRE) totaling $14.6 million and significant paydowns and payoffs for three larger relationships totaling $17.8 million included in commercial and industrial and owner occupied CRE loans.
Table 11 - NPAs
(dollars in thousands)
June 30,
2025 		December 31,
2024 		$ Change
Nonaccrual loans:
Owner occupied CRE $ 8,207 $ 11,674 $ (3,467)
Income producing CRE 14,624 25,357 (10,733)
Commercial & industrial 15,422 29,339 (13,917)
Commercial construction 1,368 7,400 (6,032)
Equipment financing 11,731 8,925 2,806
Total commercial 51,352 82,695 (31,343)
Residential mortgage 22,597 24,615 (2,018)
Home equity 4,093 4,630 (537)
Residential construction 1,203 57 1,146
Manufactured housing (1)
- 1,444 (1,444)
Consumer 1,207 138 1,069
Total
80,452 113,579 (33,127)
OREO and repossessed assets 3,507 2,056 1,451
Total NPAs $ 83,959 $ 115,635 $ (31,676)
Nonaccrual loans as a percentage of total loans 0.43 % 0.62 %
NPAs as a percentage of total assets 0.30 0.42
ACL - loans to nonaccrual loans coverage ratio 2.69 1.82
(1)In 2025, manufactured housing loans were included in consumer loans.
Investment Securities
The composition of the investment securities portfolio reflects our investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of revenue. The investment securities portfolio also provides a balance to interest rate risk and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds, furnishing liquidity, and supplying securities to pledge as required collateral for certain deposits and borrowings. The table below summarizes the carrying value of our securities portfolio and other relevant portfolio metrics including weighted-average life and effective duration as of the dates presented. Effective duration represents the expected change in the price of a security when rates change by 100 basis points.
Table 12 - Investment Securities
(dollars in thousands)
June 30, 2025 December 31, 2024
Carrying Value
% of portfolio
Carrying Value
% of portfolio
$ Change
AFS
$ 4,075,323 64 % $ 4,436,291 65 % $ (360,968)
HTM
2,306,730 36 2,368,107 35 (61,377)
Total investment securities
$ 6,382,053 $ 6,804,398 $ (422,345)
Investment securities as a % of total assets
23 % 25 %
Weighted average life
5.7 years 5.7 years
Swap adjusted effective duration
3.7 % 3.5 %
Effective duration
4.0 3.9
We utilize fair value hedges on a portion of our AFS securities portfolio in order to mitigate the impact of potential future unrealized losses on our tangible common equity. Gains and losses related to the hedge and hedged item are reflected in investment securities interest income. The changes in the fair value of the hedge and the hedged item substantially offset each other. See Note 6 to the financial statements for further detail.
At June 30, 2025, HTM debt securities had a fair value of $1.94 billion, indicating net unrealized losses of $371 million (pre-tax). Additional unrealized losses on HTM debt securities of $55.5 million (pre-tax) were included in AOCI as a result of the transfer of AFS debt securities to HTM in 2022. Unrealized losses were primarily attributable to changes in interest rates.
See Note 4 to the consolidated financial statements for additional detail.
Goodwill and Other Intangible Assets
As of June 30, 2025 and December 31, 2024, goodwill and other intangibles totaled $974 million and $957 million, respectively. In connection with the acquisition of ANB in the second quarter of 2025, we recorded goodwill and a core deposit intangible of $18.0 million and $6.29 million, respectively. See Notes 3 and 7 to the financial statements for further information.
Deposits
Customer deposits are the primary source of funds for the continued growth of our earning assets. We believe our high level of service, as evidenced by our strong customer satisfaction scores, is instrumental in attracting and retaining customer deposit accounts, which has continued to contribute to our organic deposit growth. Since December 31, 2024, customer deposits increased $514 million, which includes deposits of $374 million acquired in the ANB transaction as of the acquisition date. As of June 30, 2025, we had approximately $9.64 billion of uninsured deposits, of which $2.81 billion was collateralized by investment securities.
Table 13 - Deposits
(dollars in thousands)
June 30, 2025 December 31, 2024
Balance
% of Total Balance % of Total
Noninterest-bearing demand $ 6,381,975 26 % $ 6,211,182 26 %
NOW and interest-bearing demand 5,986,049 25 6,141,342 26
Money market and savings 7,832,527 33 7,498,735 32
Time 3,606,511 15 3,441,424 15
Total customer deposits 23,807,062 99 23,292,683 99
Brokered deposits 155,950 1 168,292 1
Total deposits $ 23,963,012 $ 23,460,975
Borrowing Activities
At June 30, 2025 and December 31, 2024, we had long-term debt outstanding of $155 million and $254 million, respectively, which includes senior debentures, subordinated debentures, and trust preferred securities. During the second quarter of 2025, we redeemed our $100 million 2030 senior debentures. At June 30, 2025 there were no short-term borrowings outstanding. At December 31, 2024, there were $195 million in short-term borrowings outstanding. The need to utilize wholesale funding sources has decreased because our liquidity needs have been met by our deposit and cash balances.
Contractual Obligations and Off-Balance Sheet Arrangements
There have not been any material changes to our contractual obligations and off-balance sheet arrangements since December 31, 2024.
Interest Rate Sensitivity Management
Interest rate sensitivity is a function of the repricing characteristics of the portfolio of assets and liabilities. Repricing characteristics are the time frames within which the interest rates on interest-earning assets and interest-bearing liabilities are subject to change either at replacement, repricing or maturity.
Management uses an asset/liability simulation model to measure the potential change in net interest revenue over time using multiple interest rate scenarios. Our modeling is based on the 12-month impact on net interest revenue simulations with various interest rate shocks and ramps, which are compared to a base scenario that assumes rates remain unchanged. In the shock scenarios, rates immediately change the full amount at the scenario onset. In the ramp scenarios, rates change by 25 basis points per month until they reach the predetermined levels.
The following table presents our interest sensitivity position at the dates indicated. The scenario results presented assume parallel movements in the yield curve, which may differ from actual future curve behavior. Other than an assumption for the runoff of estimated surge deposits, which is assumed to be replaced with higher cost wholesale funding, this presentation generally assumes no change in deposit portfolio size or composition.
Table 14 - Interest Sensitivity
Increase (Decrease) in Net Interest Revenue from Base Scenario at
June 30, 2025 December 31, 2024
Change in Rates Shock Ramp Shock Ramp
200 basis point increase 3.59 % 1.62 % 2.01 % 0.92 %
100 basis point increase 1.97 1.18 1.19 0.66
100 basis point decrease (3.02) (1.94) (2.27) (1.46)
200 basis point decrease (7.22) (3.08) (6.00) (2.38)
The change in results from December 31, 2024 to June 30, 2025 reflects more floating interest rate loans and a slight shortening of asset duration to address rising interest rate risk concerns. In addition, the balance sheet became slightly more asset sensitive at June 30, 2025 due to higher cash balances on hand at quarter-end.
Liquidity Management
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. As part of our liquidity management, we focus on maximizing the amount of securities and loans available as collateral for contingent liquidity sources and calibrating our assumptions in our liquidity stress test on an ongoing basis, particularly as it relates to deposit duration. At June 30, 2025 and December 31, 2024, we had sufficient liquid funds and qualifying collateral to support additional borrowings, which are detailed in the table below.
Table 15 - Liquid Funds and Unused Borrowing Capacity
(in thousands)
June 30, 2025 December 31, 2024
Available liquid funds:
Cash and cash equivalents $ 574,956 $ 519,873
Availability of borrowings (1):
FHLB 1,921,234 1,917,905
Federal Reserve - Discount Window 2,395,442 2,267,139
Unpledged securities available as collateral for additional borrowings 3,571,790 3,603,885
(1)Based on collateral pledged.
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 sufficient liquid assets to meet these obligations. Holding Company liquidity is maintained at a level of at least 125% of the next 12 months of forecasted cash obligations.
In the opinion of management, our liquidity position at June 30, 2025 was sufficient to meet our expected cash flow requirements for the foreseeable future. See the consolidated statement of cash flows for further detail.
Capital Resources and Dividends
Shareholders' equity at June 30, 2025 was $3.61 billion, an increase of $181 million from December 31, 2024 primarily due to year-to-date earnings, other comprehensive income and the issuance of stock for the ANB acquisition, partially offset by dividends declared on common and preferred stock.
The following table shows capital ratios, as calculated under applicable regulatory guidelines, at June 30, 2025 and December 31, 2024. As of June 30, 2025, capital levels remained characterized as "well-capitalized" under regulatory requirements in effect at the time. Additional information related to capital ratios is provided in Note 11 to the consolidated financial statements.
Table 16 - Capital Ratios
United Community Banks, Inc.
(Consolidated) 		United Community Bank
Minimum Well-
Capitalized 		Minimum Capital Plus Capital Conservation Buffer June 30,
2025 		December 31,
2024 		June 30,
2025 		December 31,
2024
Risk-based ratios:
CET1 capital 4.5 % 6.5 % 7.0 % 13.34 % 13.27 % 12.60 % 13.05 %
Tier 1 capital 6.0 8.0 8.5 13.77 13.72 12.60 13.05
Total capital 8.0 10.0 10.5 15.14 15.17 13.66 14.08
Leverage ratio 4.0 5.0 N/A 10.37 9.96 9.48 9.46
The following table shows capital composition as of June 30, 2025 and December 31, 2024.
Table 17 - Capital Composition under Basel III
(in thousands)
United Community Banks, Inc. (Consolidated)
United Community Bank
June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024
Total common shareholders' equity $ 3,524,658 $ 3,343,861 $ 3,358,442 $ 3,282,263
CECL transitional amount - 3,334 - 3,334
Goodwill (925,119) (907,090) (925,119) (907,090)
Intangibles, other than goodwill and mortgage servicing rights, net of associated DTLs (41,937) (42,334) (41,937) (42,334)
DTAs arising from net operating loss and tax credit carryforwards (6,349) (2,554) (5,422) (1,988)
Net unrealized losses on AFS securities 142,149 177,645 141,233 176,777
Accumulated net gains on cash flow hedges (6,988) (9,705) - -
Net unrealized losses on HTM securities that are included in AOCI 42,133 45,129 42,133 45,129
Other (124) (150) (124) (150)
CET1 capital 2,728,423 2,608,136 2,569,206 2,555,941
Preferred stock, net of issuance cost 88,266 88,266 - -
Tier 1 capital 2,816,689 2,696,402 2,569,206 2,555,941
Tier 2 capital instruments 65,000 85,000 - -
Qualifying ACL 214,503 200,871 214,503 200,870
Total capital $ 3,096,192 $ 2,982,273 $ 2,783,709 $ 2,756,811
Effect of Inflation and Changing Prices
A bank's asset and liability structure is substantially different from that of an industrial firm in that primarily all assets and liabilities of a bank are monetary in nature with relatively little investment in fixed assets or inventories. Management believes the effect of inflation on financial results depends on our ability to react to changes in interest rates, and by such reaction, reduce the inflationary effect on performance. We have an asset/liability management program to manage interest rate sensitivity. In addition, periodic reviews of banking services and products are conducted to adjust pricing in view of current and expected costs.
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