v3.26.1
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
11. DERIVATIVE FINANCIAL INSTRUMENTS
United uses derivative instruments to help aid against adverse price changes or interest rate movements on the value of certain assets or liabilities and on future cash flows. These derivatives may consist of interest rate swaps, caps, floors, collars, futures, forward contracts, written and purchased options. United also executes derivative instruments with its commercial banking customers to facilitate its risk management strategies.
Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.
Fair value hedges may be eligible for offset on the consolidated balance sheets because they are subject to master netting arrangements or similar agreements. United has elected not to offset the assets and liabilities subject to such arrangements on the consolidated financial statements.
United holds an interest rate swap derivative with a notional amount of $250,000. The derivative is designated as a cash flow hedge and is intended to hedge the changes in cash flows associated with floating rate FHLB borrowings. As of June 30, 2026, United has determined that no forecasted transactions related to its cash flow hedges resulted in gains or losses pertaining to cash flow hedge reclassification from AOCI to income because the forecasted transactions became probable of not occurring. United estimates that $8,528 will be reclassified from AOCI as a decrease to interest expense over the next
12-months
following June 30, 2026 related to the cash flow hedges. As of June 30, 2026, the maximum length of time over which forecasted transactions are hedged is f
our
 years.
At inception of a hedge relationship, United formally documents the hedged item, the particular risk management objective, the nature of the risk being hedged, the derivative being used, how effectiveness of the hedge will be assessed and how the ineffectiveness of the hedge will be measured. United also assesses hedge effectiveness at inception and on an ongoing basis using regression analysis. Hedge ineffectiveness is measured by using the change in fair value method. The change in fair value method compares the change in the fair value of the hedging derivative to the change in the fair value of the hedged exposure, attributable to changes in the benchmark rate.
United is subject to the Dodd-Frank Act clearing requirement for eligible derivatives. United has executed and cleared eligible derivatives through the London Clearing House (“LCH”). Variation margin at the LCH is distinguished as
settled-to-market
and settled daily based on the prior day value, rather than
collateralized-to-market.
The daily settlement of the derivative exposure does not change or reset the contractual terms of the instrument. The total notional amount of interest rate swap derivatives designated as cash flow hedges cleared through the LCH include $250,000 for asset derivatives as of June 30, 2026. Balances related to LCH are presented as a single unit of account with the fair value of the designated cash flow interest rate swap asset being reduced by variation margin posted by (with) the applicable counterparty and reported in the following table on a net basis. The related fair value on a net basis approximates zero.
 
United enters into interest rate lock commitments to finance residential mortgage loans with its customers. These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by United. Interest rate risk arises on these commitments and subsequently closed loans if interest rates change between the time of the interest rate lock and the delivery of the loan to the investor. Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward mortgage loan sales contracts. United is a party to these forward mortgage loan sales contracts to sell loans with servicing released and short sales of mortgage-backed securities. When the interest rate is locked with the borrower, the rate lock commitment, forward sale agreement, and mortgage-backed security position are undesignated derivatives and marked to fair value through earnings. A detailed discussion to determine the fair value of derivative financial instruments is presented in Note 12 to these unaudited Notes to Consolidated Financial Statements. Income from mortgage banking activities includes the gain recognized for the period presented and associated elements of fair value.
The following tables disclose the derivative instruments’ location on the Company’s Consolidated Balance Sheets and the notional amount and fair value of those instruments at June 30, 2026 and December 31, 2025.
 
    
Asset Derivatives
  
    
June 30, 2026
     
December 31, 2025
  
    
Balance

Sheet

Location
     
Notional

Amount
     
Fair

Value
     
Balance

Sheet

Location
     
Notional

Amount
     
Fair

Value
  
Derivatives designated as hedging instruments
                  
Fair Value Hedges:
                  
Interest rate swap contracts (hedging commercial loans)
      Other assets      $ 8,798      $ 394        Other assets      $ 9,466      $ 316  
     
 
 
     
 
 
        
 
 
     
 
 
  
Total Fair Value Hedges
       $ 8,798      $ 394         $ 9,466      $ 316  
Cash Flow Hedges:
                  
Interest rate swap contracts (hedging FHLB borrowings)
      Other assets      $ 250,000      $ 0        Other assets      $ 250,000      $ 0  
     
 
 
     
 
 
        
 
 
     
 
 
  
Total Cash Flow Hedges
       $ 250,000      $ 0         $ 250,000      $ 0  
     
 
 
     
 
 
        
 
 
     
 
 
  
Total derivatives designated as hedging instruments
       $ 258,798      $ 394         $ 259,466      $ 316  
     
 
 
     
 
 
        
 
 
     
 
 
  
Derivatives not designated as hedging instruments
                  
Forward loan sales commitments
      Other assets      $ 0      $ 0        Other assets      $ 3,981      $ 15  
Interest rate lock commitments
      Other assets        36,350        804        Other assets        23,046        458  
     
 
 
     
 
 
        
 
 
     
 
 
  
Total derivatives not designated as hedging instruments
       $ 36,350      $ 804         $ 27,027      $ 473  
     
 
 
     
 
 
        
 
 
     
 
 
  
Total asset derivatives
       $ 295,148      $ 1,198         $ 286,493      $ 789  
     
 
 
     
 
 
        
 
 
     
 
 
  
 
    
Liability Derivatives
  
    
June 30, 2026
     
December 31, 2025
  
    
Balance

Sheet

Location
     
Notional

Amount
     
Fair

Value
     
Balance

Sheet

Location
     
Notional

Amount
     
Fair

Value
  
Derivatives not designated as hedging instruments
                  
TBA mortgage-backed securities
      Other liabilities      $ 55,584      $ 77        Other liabilities      $ 33,882      $ 70  
Forward loan sales commitments
      Other liabilities        1,784        1        Other liabilities        0        0  
     
 
 
     
 
 
        
 
 
     
 
 
  
Total derivatives not designated as hedging instruments
       $ 57,368      $ 78         $ 33,882      $ 70  
     
 
 
     
 
 
        
 
 
     
 
 
  
Total liability derivatives
       $ 57,368      $ 78         $ 33,882      $ 70  
     
 
 
     
 
 
        
 
 
     
 
 
  
The following table represents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets/(liabilities)
that
are designated as a fair value accounting relationship as of June 30, 2026 and December 31, 2025.
 
         
June 30, 2026
  
Derivatives in Fair Value
Hedging Relationships
   
Location in the Statement
of Condition
   
Carrying Amount of
the Hedged
Assets/(Liabilities)
     
Cumulative Amount of

Fair Value Hedging

Adjustment Included

in the Carrying

Amount of the Hedged
Assets/(Liabilities)
    
Cumulative Amount of
Fair Value Hedging
Adjustment Remaining for
any Hedged Assets/
(Liabilities) for which

Hedge Accounting has

been Discontinued
  
Interest rate swaps
    Loans, net of unearned income    $ 8,798      $ (405 )    $ 0  
         
December 31, 2025
  
Derivatives in Fair Value
Hedging Relationships
   
Location in the Statement
of Condition
   
Carrying Amount of
the Hedged

Assets/(Liabilities)
     
Cumulative Amount of
Fair Value Hedging
Adjustment Included
in the Carrying
Amount of the Hedged
Assets/(Liabilities)
    
Cumulative Amount of
Fair Value Hedging
Adjustment Remaining for
any Hedged Assets/
(Liabilities) for which
Hedge Accounting has
been Discontinued
  
Interest rate swaps
    Loans, net of unearned income    $ 9,466      $ (331 )    $ 0  
Derivative contracts involve the risk of dealing with both bank customers and institutional derivative counterparties and their ability to meet contractual terms. Credit risk arises from the possible inability of counterparties to meet the terms of their contracts. United’s exposure is limited to the replacement value of the contracts rather than the notional amount of the contract. The Company’s agreements generally contain provisions that limit the unsecured exposure up to an agreed upon threshold. Additionally, the Company attempts to minimize credit risk through certain approval processes established by management.
The effect of United’s derivative financial instruments on its unaudited Cons
ol
idated Statements of Income for the three and six months ended June 30, 2026 and 2025 are presented as follows:
 
           
Three Months Ended
  
    
Income Statement

Location
     
June 30,
2026
     
June 30,
2025
  
Derivatives in hedging relationships
         
Cash flow Hedges:
         
Interest rate swap contracts
     
Interest on long-term borrowings
      $ 2,016      $ 2,465  
Fair Value Hedges:
         
Interest rate swap contracts
      Interest and fees on loans        2        (1 ) 
     
 
 
     
 
 
  
Total derivatives in hedging relationships
       $ 2,018      $ 2,464  
     
 
 
     
 
 
  
 
           
Three Months Ended
  
    
Income Statement

Location
     
June 30,
2026
     
June 30,
2025
  
Derivatives not designated as hedging instruments
         
Forward loan sales commitments
      Income from Mortgage Banking Activities      $ 18      $ 39  
TBA mortgage-backed securities
      Income from Mortgage Banking Activities        (489 )       (403 ) 
Interest rate lock commitments
      Income from Mortgage Banking Activities        (27 )       0  
     
 
 
     
 
 
  
Total derivatives not designated as hedging instruments
       $ (498 )     $ (364 ) 
     
 
 
     
 
 
  
Total derivatives
       $ 1,520      $ 2,100  
     
 
 
     
 
 
  
 
           
Six Months Ended
  
    
Income Statement

Location
     
June 30,
2026
     
June 30,
2025
  
Derivatives in hedging relationships
         
Cash flow Hedges:
         
Interest rate swap contracts
     
Interest on long-term borrowings
      $ 4,035      $ 4,917  
Fair Value Hedges:
         
Interest rate swap contracts
      Interest and fees on loans        4        (3 ) 
     
 
 
     
 
 
  
Total derivatives in hedging relationships
       $ 4,039      $ 4,914  
     
 
 
     
 
 
  
Derivatives not designated as hedging instruments
         
Forward loan sales commitments
      Income from Mortgage Banking Activities      $ (15 )     $ 64  
TBA mortgage-backed securities
      Income from Mortgage Banking Activities        (8 )       (841 ) 
Interest rate lock commitments
      Income from Mortgage Banking Activities        321        335  
     
 
 
     
 
 
  
Total derivatives not designated as hedging instruments
       $ 298      $ (442 ) 
     
 
 
     
 
 
  
Total derivatives
       $ 4,337      $ 4,472  
     
 
 
     
 
 
  
For the three and six months ended June 30, 2026 and 2025, changes in the fair value of any interest rate swaps attributed to
he
dge ineffectiveness were recorded, but not significant to United’s Consolidated Statements of
Income
.