Investment Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Investment Securities

2. INVESTMENT SECURITIES

Securities Available for Sale

Securities held for indefinite periods of time are classified as available for sale and carried at estimated fair value. The amortized cost, estimated fair values, and allowance for credit losses of securities available for sale are summarized as follows.

	March 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance For Credit Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	439,648	$	45	$	5,582	$	0	$	434,111
State and political subdivisions		611,240		14		82,953		0		528,301
Residential mortgage-backed securities
Agency		1,183,484		4		176,629		0		1,006,859
Non-agency		83,698		0		8,394		0		75,304
Commercial mortgage-backed securities
Agency		507,889		13		54,189		0		453,713
Asset-backed securities		837,064		75		6,209		0		830,930
Single issue trust preferred securities		16,390		0		1,057		0		15,333
Other corporate securities		301,199		0		31,775		0		269,424
Total	$	3,980,612	$	151	$	366,788	$	0	$	3,613,975

	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance For Credit Losses		Estimated Fair Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	492,638	$	4	$	7,692	$	0	$	484,950
State and political subdivisions		613,588		11		79,768		0		533,831
Residential mortgage-backed securities
Agency		1,217,744		7		167,810		0		1,049,941
Non-agency		100,364		0		9,753		0		90,611
Commercial mortgage-backed securities
Agency		511,560		13		52,275		0		459,298
Asset-backed securities		872,048		44		11,454		0		860,638
Single issue trust preferred securities		16,380		0		1,239		0		15,141
Other corporate securities		325,573		0		33,606		0		291,967
Total	$	4,149,895	$	79	$	363,597	$	0	$	3,786,377

For the adoption of ASC Topic 326, “Financial Instruments—Credit Losses,” United made a policy election to exclude accrued interest from the amortized cost basis of available-for-sale debt securities and report accrued interest separately in “Accrued interest receivable” in the consolidated balance sheets. Available-for-sale debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, United does not currently recognize an allowance for credit loss against accrued interest receivable on available-for-sale debt securities. The table above excludes accrued interest receivable of $19,963 and $20,878 at March 31, 2024 and December 31, 2023, respectively, that is recorded in “Accrued interest receivable.”

The following is a summary of securities available for sale which were in an unrealized loss position at March 31, 2024 and December 31, 2023.

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2024
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	3,561	$	12	$	178,459	$	5,570	$	182,020	$	5,582
State and political subdivisions		4,089		196		512,438		82,757		516,527		82,953
Residential mortgage-backed securities
Agency		6,791		95		999,081		176,534		1,005,872		176,629
Non-agency		0		0		72,662		8,394		72,662		8,394
Commercial mortgage-backed securities
Agency		0		0		451,366		54,189		451,366		54,189
Asset-backed securities		79,624		175		656,712		6,034		736,336		6,209
Single issue trust preferred securities		0		0		15,333		1,057		15,333		1,057
Other corporate securities		2,422		78		261,891		31,697		264,313		31,775
Total	$	96,487	$	556	$	3,147,942	$	366,232	$	3,244,429	$	366,788

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2023
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	4,625	$	11	$	477,615	$	7,681	$	482,240	$	7,692
State and political subdivisions		2,050		193		517,186		79,575		519,236		79,768
Residential mortgage-backed securities
Agency		9,755		51		1,038,632		167,759		1,048,387		167,810
Non-agency		8,964		101		81,647		9,652		90,611		9,753
Commercial mortgage-backed securities
Agency		0		0		456,866		52,275		456,866		52,275
Asset-backed securities		15,866		216		829,778		11,238		845,644		11,454
Single issue trust preferred securities		2,922		182		12,219		1,057		15,141		1,239
Other corporate securities		0		0		274,308		33,606		274,308		33,606
Total	$	44,182	$	754	$	3,688,251	$	362,843	$	3,732,433	$	363,597

The following table shows the proceeds from maturities, sales and calls of available for sale securities and the gross realized gains and losses on sales and calls of those securities that have been included in earnings as a result of any sales and calls. Gains or losses on sales and calls of available for sale securities were recognized by the specific identification method.

	Three Months Ended March 31
	2024		2023
Proceeds from maturities, sales and calls	$	416,410	$	185,748
Gross realized gains		0		0
Gross realized losses		0		420

At March 31, 2024, gross unrealized losses on available for sale securities were $366,788 on 1,071 securities of a total portfolio of 1,124 available for sale securities. Securities with the most significant gross unrealized losses at March 31, 2024 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities and other corporate securities.

In determining whether or not a security is impaired, management considered the severity of the loss in conjunction with United’s positive intent and the more likely than not ability to hold these securities to recovery of their cost basis or maturity. Generally, the significant amount of gross unrealized losses on available for sale securities at March 31, 2024 was the result of rising interest rates.

State and political subdivisions

United’s state and political subdivisions portfolio relates to securities issued by various municipalities located throughout the United States. The total amortized cost of available for sale state and political subdivision securities was $611,240 at March 31, 2024. As of March 31, 2024, approximately 48% of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality. The majority of the portfolio was rated AA or higher, and no securities within the portfolio were rated below investment grade as of March 31, 2024. In addition to monitoring the credit ratings of these securities, management also evaluates the financial performance of the underlying issuers on an ongoing basis. Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities had credit losses at March 31, 2024.

Mortgage-backed securities

The fair value of mortgage-backed securities is affected by changes in interest rates and prepayment speeds. When interest rates decline, prepayment speeds generally accelerate due to homeowners refinancing their mortgages at lower interest rates. This may result in the proceeds being reinvested at lower interest rates. Rising interest rates may decrease the assumed prepayment speed. Slower prepayment speeds may extend the maturity of the security beyond its estimated maturity. Therefore, investors may not be able to invest at current higher market rates due to the extended expected maturity of the security. United had a net unrealized loss of $239,195 on mortgage-backed securities at March 31, 2024. Below is a detailed discussion of mortgage-backed securities by type.

United’s agency mortgage-backed securities portfolio relates to securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae. The total amortized cost of available for sale agency mortgage-backed securities was $1,691,373 at March 31, 2024. Of the $1,691,373 amount, $507,889 was related to agency commercial mortgage-backed securities and $1,183,484 was related to agency residential mortgage-backed securities. Each of the agency mortgage-backed securities provides a guarantee of full and timely payments of principal and interest by the issuing agency. Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities had credit losses at March 31, 2024.

United’s non-agency residential mortgage-backed securities portfolio relates to securities of various private label issuers. The total amortized cost of available for sale non-agency residential mortgage-backed securities was $83,698 at March 31, 2024. Of the $83,698, 100% was rated AAA. Based upon management’s analysis and judgment, it was determined that none of the non-agency residential mortgage-backed securities had credit losses at March 31, 2024.

Asset-backed securities

As of March 31, 2024, United’s asset-backed securities portfolio had a total amortized cost balance of $837,064. 100% of the portfolio was investment grade rated as of March 31, 2024. Approximately 24% of the portfolio relates to securities that are backed by Federal Family Education Loan Program (“FFELP”) student loan collateral which includes a minimum of a 97% government repayment guaranty, as well as additional credit support and subordination in excess of the government guaranteed portion. Approximately 76% of the portfolio relates to collateralized loan obligation securities that are all AAA rated. Upon reviewing this portfolio as of March 31, 2024, it was determined that none of the asset-backed securities had credit losses.

Single issue trust preferred securities

The majority of United’s single issue trust preferred portfolio consists of obligations from large cap banks (i.e. banks with market capitalization in excess of $10 billion). All single issue trust preferred securities are currently receiving interest payments. The amortized cost of available for sale single issue trust preferred securities as of March 31, 2024 consisted of $7,477 in investment grade bonds, $3,109 in split rated bonds, and $5,804 in unrated bonds. Management reviews each issuer’s current and projected earnings trends, asset quality, capitalization levels, and other key factors. Upon completing the review for the first quarter of 2024, it was determined that none of the single issue trust preferred securities had credit losses.

Other corporate securities

As of March 31, 2024, United’s other corporate securities portfolio had a total amortized cost balance of $301,199. The majority of the portfolio consisted of debt issuances of corporations representing a variety of industries, including financial institutions. Of the $301,199, 96% had at least one rating above investment grade, 1% were below investment grade rated, and 3% were unrated. For other corporate securities, management has evaluated the near-term prospects of the investment in relation to the severity of any unrealized loss. Based upon management’s analysis and judgment, it was determined that none of the other corporate securities had credit losses at March 31, 2024.

The amortized cost and estimated fair value of securities available for sale at March 31, 2024 and December 31, 2023 by contractual maturity are shown as follows. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.

	March 31, 2024				December 31, 2023
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	431,832	$	429,801	$	497,555	$	493,651
Due after one year through five years		483,693		447,504		448,020		416,436
Due after five years through ten years		853,498		754,469		852,698		751,780
Due after ten years		2,211,589		1,982,201		2,351,622		2,124,510
Total	$	3,980,612	$	3,613,975	$	4,149,895	$	3,786,377

Equity securities at fair value

Equity securities consist mainly of mutual funds of Community Reinvestment Act (“CRA”) qualified investments and equity securities within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries. The fair value of United’s equity securities was $8,762 at March 31, 2024 and $8,945 at December 31, 2023.

	Three Months Ended March 31
	2024			2023
Unrealized gains recognized during the period on equity securities still held at period end	$	0			82
Unrealized losses recognized during the period on equity securities still held at period end		(99	)		(67	)
Net (losses) gains recognized during the period	$	(99)		$	15

Other investment securities

During the first quarter of 2024, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the first quarter of 2024 had a significant adverse effect on the recorded value of any of its cost method securities. United determined that there was no individual security that experienced an adverse event during the first quarter. There were no other events or changes in circumstances during the first quarter which would have an adverse effect on the recorded fair value of its cost method securities.

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $2,279,895 and $2,307,591 at March 31, 2024 and December 31, 2023, respectively.