Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

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, 2024		December 31, 2023
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit	$	4,075,892	$	4,305,483
Letters of credit	66,587		61,808

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

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.

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 invested by United and 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, 2024		December 31, 2023
Investments in LIHTC:
Carrying amount	Other assets	$	57,728	$	48,867
Amount of future funding commitments included in carrying amount	Other liabilities	22,178		14,176
Lending exposure	Loans and leases held for investment	11,691		803
Renewable energy investments:
Carrying amount	Other assets	4,594		18,631

Amount of future funding commitments (1)	N/A	14,406		14,406
Fintech funds and certain other equity method investments:
Carrying amount	Other assets	34,401		33,720

Amount of future funding commitments not included in carrying amount	N/A	28,313		25,008

(1) Starting in 2024, United no longer records future funding commitments related to its renewable energy investments on the balance sheet. Prior to 2024, these commitments were included in other liabilities.

The following table presents a summary of tax credits and amortization expense associated with the United’s tax credit investment activity. Activity related to renewable energy investments was not material to the financials for the period presented.

(dollars in thousands)

Income Statement Location

Three Months Ended
March 31, 2024

Investments in LIHTC:

Income tax credits and other income tax benefits

Income tax expense

(1,996)

Amortization expense

Income tax expense

1,831