Investment Securities

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Investment Securities

NOTE B—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 and estimated fair values of securities available for sale are summarized as follows.

	December 31, 2023
(Dollars in thousands)	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

	December 31, 2022
(Dollars in thousands)	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	$	548,407	$	12	$	18,927	$	0	$	529,492
State and political subdivisions		820,167		36		110,673		0		709,530
Residential mortgage-backed securities
Agency		1,369,471		4		194,531		0		1,174,944
Non-agency		121,336		66		9,429		0		111,973
Commercial mortgage-backed securities
Agency		627,768		8		65,223		0		562,553
Asset-backed securities		943,813		0		32,202		0		911,611
Single issue trust preferred securities		17,342		88		1,146		0		16,284
Other corporate securities		563,425		44		37,931		0		525,538
Total	$	5,011,729	$	258	$	470,062	$	0	$	4,541,925

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 $20,878,000 and $23,955,000 at December 31, 2023 and December 31, 2022, 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 December 31, 2023 and December 31, 2022.

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		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

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
December 31, 2022
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	473,025	$	13,628	$	48,793	$	5,299	$	521,818	$	18,927
State and political subdivisions		496,328		63,019		192,234		47,654		688,562		110,673
Residential mortgage-backed securities
Agency		623,587		70,744		550,135		123,787		1,173,722		194,531
Non-agency		58,839		2,083		42,901		7,346		101,740		9,429
Commercial mortgage-backed securities
Agency		396,380		27,469		163,226		37,754		559,606		65,223
Asset-backed securities		425,482		14,134		486,129		18,068		911,611		32,202
Single issue trust preferred securities		0		0		13,109		1,146		13,109		1,146
Other corporate securities		195,425		18,064		261,170		19,867		456,595		37,931
Total	$	2,669,066	$	209,141	$	1,757,697	$	260,921	$	4,426,763	$	470,062

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.

	Year Ended
(In thousands)	2023		2022		2021
Proceeds from maturities, sales and calls	$	952,213	$	575,748	$	731,902
Gross realized gains		0		2		1,673
Gross realized losses		7,659		0		122

At December 31, 2023, gross unrealized losses on available for sale securities were $363,597,000 on 1,091 securities of a total portfolio of 1,140 available for sale securities. Securities with the most significant gross unrealized losses at December 31, 2023 consisted primarily of agency residential mortgage-backed securities, state and political subdivision securities, agency commercial mortgage-backed securities, asset-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 December 31, 2023 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 $613,588,000 at December 31, 2023. As of December 31, 2023, 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 December 31, 2023. 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 December 31, 2023.

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 $229,818,000 on mortgage-backed securities at December 31, 2023. 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 $1,729,304,000 at December 31, 2023. Of the $1,729,304,000 amount, $511,560,000 was related to agency commercial mortgage-backed securities and $1,217,744,000 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 December 31, 2023.

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 $100,364,000 at December 31, 2023. Of the $100,364,000, 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 December 31, 2023.

Asset-backed securities

As of December 31, 2023, United’s asset-backed securities portfolio had a total amortized cost balance of $872,048,000. 100% of the portfolio was investment grade rated as of December 31, 2023. 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 December 31, 2023, 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 December 31, 2023 consisted of $7,475,000 in investment grade bonds, $3,104,000 in split rated bonds, and $5,801,000 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 fourth quarter of 2023, it was determined that none of the single issue trust preferred securities had credit losses.

Corporate securities

As of December 31, 2023, United’s other corporate securities portfolio had a total amortized cost balance of $325,573,000. The majority of the portfolio consisted of debt issuances of corporations representing a variety of industries, including financial institutions. Of the $325,573,000, 97% had at least one rating above investment grade, none 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 December 31, 2023.

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

Maturities of mortgage-backed securities with an amortized cost of $1,829,668,000 and an estimated fair value of $1,599,850,000 at December 31, 2023 are included below based upon contractual maturity.

(In thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	497,555	$	493,651
Due after one year through five years		448,020		416,436
Due after five years through ten years		852,698		751,780
Due after ten years		2,351,622		2,124,510
Total	$	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 $8,945,000 at December 31, 2023 and $7,629,000 at December 31, 2022.

	Year Ended
(In thousands)	December 31, 2023			December 31, 2022
Net gains recognized during the period on equity securities sold	$	0		$	0
Unrealized gains recognized during the period on equity securities still held at period end		358			94
Unrealized losses recognized during the period on equity securities still held at period end		(345	)		(684	)
Net gains (losses) recognized during the period	$	13		$	(590	)

Other investment securities

During the fourth quarter of 2023, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the fourth quarter of 2023 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 fourth quarter. There were no other events or changes in circumstances during the fourth 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 $2,307,591,000 and $2,412,820,000 at December 31, 2023 and December 31, 2022, respectively.