UNITED COMMUNITY BANKS INCUCB
UNITED COMMUNITY BANKS INC Commitments Disclosure
Commitments and Contingencies
The following table summarizes, as of the dates indicated, the contract amount of certain off-balance sheet instruments:
| December 31, | |||||||||||
(in thousands) | 2025 | 2024 | |||||||||
| Financial instruments whose contract amounts represent credit risk: | |||||||||||
| Commitments to extend credit | $ | 4,732,083 | $ | 3,970,991 | |||||||
| Letters of credit | 53,008 | 57,983 | |||||||||
Commitments to extend credit are agreements 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. Since many of the commitments may expire without being drawn on, the total commitment amounts do not necessarily represent future cash requirements.
Letters of credit are conditional commitments issued by United and could result in the commitment being drawn on when the underlying transaction is consummated between the customer and the third party or upon the non-performance of the customer. Those guarantees are primarily issued to local businesses and government agencies. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. In most cases, the Bank holds real estate, certificates of deposit, and other acceptable collateral as security supporting those commitments for which collateral is deemed necessary. The extent of collateral held for those commitments varies.
United maintains an ACL for these unfunded commitments, which is included in other liabilities in the consolidated balance sheets. The ACL for unfunded loan commitments is determined as part of the quarterly ACL analysis. See Note 1 for further detail.
For certain purchase card and credit card agreements between United customers and a third party institution, in the case of the borrower’s default, United will make the holder of the loan whole. As of December 31, 2025 and 2024, the outstanding balance of these purchase and credit card loans totaled $10.0 million and $3.25 million, respectively.
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 financial position or results of operations.
Tax Credit and Certain Equity Investments
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 balance, future funding commitments and any related loans to the entity. Loans to these entities are underwritten in substantially the same manner as other loans and are generally secured.
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 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 of investments and future funding commitments made.
The following table summarizes, as of the dates indicated, tax credit and certain equity method investments:
| December 31, | ||||||||||||||||||||
(in thousands) | 2025 | 2024 | ||||||||||||||||||
| Investments in LIHTC: | ||||||||||||||||||||
| $ | 80,024 | $ | 52,626 | |||||||||||||||||
Amount of future funding commitments | 41,539 | 16,179 | ||||||||||||||||||
Lending exposure (1) | 42,474 | 14,344 | ||||||||||||||||||
| Renewable energy investments: | ||||||||||||||||||||
| Carrying amount | 3,546 | 3,879 | ||||||||||||||||||
Amount of future funding commitments | 12,274 | 6,884 | ||||||||||||||||||
| Fintech funds and certain other equity method investments: | ||||||||||||||||||||
| Carrying amount | 50,390 | 36,976 | ||||||||||||||||||
Amount of future funding commitments | 38,535 | 31,388 | ||||||||||||||||||
(1) Includes loans outstanding and future commitments to extend credit, net of participations.
The following table presents a summary of tax credits and amortization expense associated with those investments accounted for using the proportional amortization method for the periods indicated.
(in thousands) | Income Statement Location | 2025 | 2024 | ||||||||||||||
| Investments in LIHTC: | |||||||||||||||||
| Income tax credits and other income tax benefits | $ | (9,264) | $ | (7,986) | |||||||||||||
| Amortization expense | 8,125 | 7,046 | |||||||||||||||
Renewable energy investments: | |||||||||||||||||
| Income tax credits and other income tax benefits | Income tax expense | $ | (9,880) | $ | — | ||||||||||||
| Amortization expense | Income tax expense | 9,161 | — | ||||||||||||||
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.